The U.S. government could default on its debt in early September if Congress does not raise the debt ceiling before then, according to a new study from the Bipartisan Policy Center (BPC) set to be released Monday.
“We now see a significant risk that the ‘X date’ could arrive in the first half of September,” said Shai Akabas, BPC’s director of economic policy.
{mosads}The U.S. officially hit its debt limit earlier this year, but the Treasury Department has been using what are known as “extraordinary measures” that allow it to borrow internally in ways that do not count toward the debt. When those measures run out, the government will no longer be able to pay all its bills and would default, a move that would almost certainly trigger chaos in global financial markets.
Though BPC still projects the deadlines is more likely to land in October, just the possibility of it hitting in September raises considerable political stakes.
Congress has been planning to lift the debt limit as part of an eventual deal to raise spending limits and prevent a government shutdown ahead of the new fiscal year, which begins Oct. 1.
Democrats have planned on using the debt ceiling as leverage in spending talks with the White House. Speaker Nancy Pelosi (D-Calif.) has said the debt ceiling should be addressed either alongside or after the statutory spending caps are raised for fiscal 2020 and fiscal 2021.