U.S. Debt Limit Could Be Reached in Mid-October, Analysts Say

The United States officially hit its statutory debt limit in late July, but the Treasury Department has been using “extraordinary measures” to curb or delay investments and stave off a default. Predicting the true deadline is harder this year because government payments related to the pandemic have reduced clarity about when certain taxes will be collected and when federal money is flowing out the door.

If Congress fails to act, the United States will be in uncharted territory.

In its analysis, the policy center said that if the true deadline for breaching the debt limit was Oct. 15, the earliest end of its projected range, the Treasury Department would be about $265 billion short of paying all its bills through mid-November. About 40 percent of the money that is owed would go unpaid.

“Realistically, on a day-to-day basis, fulfilling all payments for important and popular programs would quickly become impossible,” the report said, pointing to Social Security, Medicare, Medicaid and military active-duty pay.

The Treasury Department has said it has no official contingency plan if the debt limit is breached. However, in previous standoffs, Treasury officials have contemplated what they would do.

The Bipartisan Policy Center notes that the Treasury could try to prioritize payments, which essentially means paying some bills and not others. It could also choose to delay all bills and then make payments once enough revenue had been received to cover the payments due for an entire day.

Article source: https://www.nytimes.com/2021/09/24/business/us-debt-limit-timeline.html