Debt Limit Analysis

The debt limit, set by law, restricts the total amount of money that the federal government can legally borrow. When reached, the Treasury Department can no longer borrow money to cover government operations. It can temporarily draw on “extraordinary measures”—accounting maneuvers that allow the government to continue standard operations for a limited period. Once those extraordinary measures and the Treasury’s cash reserves run out, the federal government would reach the “X Date”—the day on which the U.S. government is unable to meet all its obligations in full and on time.

Since 2011, BPC has played a leading role in educating policymakers and the public about the X Date. Using publicly available data on government cash flows and changes in intragovernmental debt, BPC projects an X Date range—reflecting the inherent uncertainty—to help policymakers understand the period of time when the risk of inaction rises dramatically. Failure to extend the debt limit in a timely manner would likely have catastrophic consequences for global financial markets and Americans across the country.