'Clock is ticking': Lawmakers return to Washington facing fast-approaching debt limit 'X-date'

The federal government could run out of cash as soon as this summer.

April 15, 2023, 1:22 PM

As lawmakers return Monday from recess, they are staring down a fast-approaching deadline to address the debt limit or risk an unprecedented default.

The United States reached its $31.4 trillion borrowing limit back in January and is now relying on "extraordinary measures" to keep the government fully funded and avoid what would be an economically catastrophic default. When exactly those measures will run out -- dubbed the "X-date" -- is a moving target, experts told ABC News, though it could happen as early as this summer.

"The clock is ticking," said Rachel Snyderman, the senior associate director of economic policy at the Bipartisan Policy Center, which predicts the U.S. will be unable to meet its financial obligations at some point in the "summer or early fall."

Economists at Moody's Analytics have estimated the Treasury Department will run out of money by mid-August. They currently project the "X date" to be Aug. 18 while emphasizing that date can change based on a myriad of exogenous factors including April tax filings and unexpected government spending.

"Nailing down the precise day that the Treasury runs out of cash to pay everyone on time is highly uncertain and very difficult to gauge," said Mark Zandi, the chief economist at Moody's Analytics.

The United States Department of the Treasury building is seen in Washington D.C., on April 12, 2023.
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If no resolution is reached before the "X-date" and the U.S. were to default for the first time in history, Zandi warned markets would "react very violently."

"We'd see declining stock prices and wild gyrations in markets," he said.

In this undated file photo, the US Capitol building is shown in Washington, D.C.
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Lawmakers have, so far, made little movement on the debt limit and left Washington last month at an impasse.

House Republicans have demanded spending cuts in exchange for lifting the debt ceiling, while Democrats are calling for a "clean" raise without conditions.

The opposing views led to a standoff between House Speaker Kevin McCarthy and President Joe Biden, with McCarthy calling on Biden to negotiate and Biden challenging McCarthy to first present a budget.

Rep. Kevin Hern, the chairman of the Republican Study Committee, which represents the largest group of House Republicans, told his colleagues ahead of their return that it's time to act on the issue.

"Passage of a strong debt limit bill before the end of the April legislative session must be the chamber's top priority," Hern said. "We must work night and day to get it passed to show the American people we can be trusted and force the Senate and White House to answer for their dereliction of duty."

The negotiations, if left to the last minute, have the potential to "roil financial markets," said Snyderman.

In 2011, a similar debt limit fight was resolved at the eleventh hour -- but not before Standard & Poor downgraded the credit rating of the U.S. government for the first time ever.

"This is an issue of political will," said Snyderman. "Both sides of the aisle know how to address this issue, the debt limit has been raised or suspended numerous times throughout history by congresses and administrations of both parties. There is time for both parties to come together to address this, to talk with one another as opposed to past one another."