A debt ceiling breach may be upon us … but hopefully it is not.
Depending on how negotiations play out in the next few days, the United States could blow past June 1, Treasury Secretary Janet Yellen’s earliest projection for the deadline when the country is no longer able to pay all its bills. That date, otherwise known in policy parlance as the “X-date,” is one that Yellen cited again this week as the point when the US could potentially run out of money.
While there’s some uncertainty around whether June 1 is a hard-and-fast deadline, it’s still not the best sign if lawmakers don’t manage to get an agreement by then. And even if Democrats and Republicans secure a deal, they’ll still have to write and pass legislation with just a few days to go.
As the 2011 debt ceiling standoff made clear, getting close to an X-date can rattle the markets and even result in the US’s credit rating getting downgraded, which could make it more expensive for the government to borrow money. Congress’s willingness to get so close to an actual default also ratchets up the uncertainty around whether the country can keep on meeting its obligations, and if this could be the time that it actually goes over the edge.
What is the so-called “X-date” and why does it matter?
The X-date is when things start to get real and the US is no longer able to meet its financial obligations. It’s when Treasury Secretary Yellen runs out of rabbits to pull out of her hat — basically accounting tricks also known as “extraordinary measures” — to keep paying the country’s bills. We don’t know when exactly X-date is, but it could be as soon as June 1 (though some say it’s sometime in August). It matters because that’s the deadline here, the point when havoc could ensue.
Yellen and others have noted that the June 1 date is a projection at this point. It’s “an estimate depending on the flow of revenue and outlays on a daily basis, but it is subject to a…
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