The political battle over raising the national debt ceiling may come sooner than expected.
“Based on financial data from Treasury, we estimate that the government will be unable to pay all of its bills as early as February 15, also known as the X Date,” said Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center.
After Feb. 15, $452 billion in scheduled payments — including IRS tax refunds and debt interest payments — are scheduled to go out. The government is only projected to receive $277 billion during that period.
“If we reach the X Date and Treasury is forced to prioritize payments, handling payments for many important and popular programs will quickly become impossible, causing disruption to an already fragile economic recovery,” Bell said.
While the U.S. officially hit its statutory debt limit December 31, Treasury Secretary Timothy Geithner has used “extraordinary measures” — including borrowing $200 billion in emergency funds — to keep the government afloat.
Emergency borrowing in the past has allowed the government to stay open from mid-May to early August.
Republicans have so far held strong in their demand that spending cuts accompany any debt limit increase. But a group of Democratic senators has sent President Barack Obama a letter urging him to invoke the 14th Amendment and bypass Congress to address the debt ceiling.
That unlikely political power play would almost certainly result in a lawsuit from House Republicans.
The Bipartisan Policy Center estimates $1.1 trillion is needed to fully fund the government through 2013, and another trillion is needed to make it through the end of 2014.
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