US Could Default on Debt by Early June if Debt Ceiling Not Raised - Think Tank

WASHINGTON (Pakistan Point News / Sputnik - 22nd February, 2023) The United States could face an unprecedented default on its payments by early June without the raising of its debt ceiling by Congress, which is controlled by the Republican rivals of President Joe Biden's Democratic administration, the Bipartisan Policy Center (BPC) think tank said on Wednesday.

"Absent congressional action, the debt limit 'X date' - the day when the Federal government can no longer meet all its obligations in full and on time - will likely arrive in summer or early fall of 2023," the BPC said in a statement.

Referring to an analysis by its Economic Policy Director Shai Akabas, the BPC said the latest forecast overwrites its earlier prediction that the "extraordinary measures" the US Treasury Department has resorted to for paying government bills will last until the third quarter of 2023.

"Policymakers have an opportunity now to inject certainty into the US and global economy by beginning, in earnest, bipartisan negotiations around our nation's fiscal health and taking action to uphold the full faith and credit of the United States well before the X-Date," Akabas said in the statement.

The debt limit drama has become a yearly political fight in Congress between the two parties. A drawn-out struggle to raise the nation's debt ceiling in 2011 triggered a financial crisis that culminated in major credit rating agency Standard & Poor's stripping the United States of its top triple-A credit status.

Treasury Secretary Janet Yellen informed Congress in January that the department had found a workaround to the debt default by delaying payment on non-critical obligations. The actions will buy the country time until Congress can pass legislation that will either raise the nation's $31.4 trillion borrowing authority or suspend the limit for a period of time.