©Portal. Dollar bills 03/10/2023. Portal/Dado Ruvic/Illustration
By David Lawder
WASHINGTON (Portal) The U.S. government will begin defaulting on its repayment obligations between early June and early August unless the federal debt limit is raised, signaling the think tank Bipartisan Policy Center said Tuesday the pressure of a drop in tax revenues.
The starting period of the centrist institute’s latest estimate for socalled “XDay” when the government runs out of money to meet its obligations aligns with that of US Treasury Secretary Janet Yellen, who last week warned that a Payment default can occur as early as June 1st.
The Bipartisan Policy Center (BPC), which closely monitors disputes over debt limits in Congress, estimated in February that Date X could be between summer and early fall in the United States, but now sees a much closer default than it used to if Congress failed to raise the $31.4 trillion credit limit.
In its latest analysis, the BPC said weak revenue during tax filing season was exacerbated by late payments to taxpayers in some severe stormdisaster areas, including much of California and some counties in Georgia and Alabama, raising the likelihood of a cash shortage in early June.
“The next few weeks will be crucial in assessing the strength of government cash flows,” said Shai Akabas, director of economic policy at the BPC. “If a resolution is not reached before June, with all the confidence and credit of the United States, policymakers could be playing Russian roulette every day, risking financial disaster for their constituents and the country.”