UNITED STATES NEWS

It’s complicated: ‘X-date’ calculations aim to zero in on when the US may run short of cash

May 25, 2023, 8:42 AM | Updated: May 26, 2023, 4:36 pm

WASHINGTON (AP) — For all the concern over just when the government might run short of money to pay its bills, it turns out that no one can be absolutely sure exactly when the country will default — what officials are calling the “X-date” — if there’s no deal to raise the debt limit.

Calculating when the country is going to run out of money requires monitoring major fluctuations in cash flowing into and out of the Treasury and factoring in the timing and size of big payments coming due, among other factors.

Now, with only days left for the White House and congressional leaders to negotiate a deal that would allow the government to borrow more money before the U.S. hits the statutory debt ceiling, knowing the drop-dead date is crucial.

And amid all the squabbling over the debt, the X-date itself has inevitably become a subject of political rancor.

WHAT IS THE “X-DATE”?

The X-date arrives when the government no longer has enough of a financial cushion to pay all its bills, having exhausted the “extraordinary measures” it’s been using since January to stretch existing funds.

Treasury Secretary Janet Yellen’s latest estimation is that the U.S. could default by June 5 if there’s no deal to raise the legal borrowing limit to support bill paying.

In addition to Treasury, several outside groups and companies try to independently pin down the date, including the Congressional Budget Office, Moody’s Analytics and the private Bipartisan Policy Center, by poring over public data on government cash flows and changes in debt. Their estimates are all within a few days of Treasury’s projections.

Shai Akabas, from the Bipartisan Policy Center, helped coin the term “X-date” along with future Federal Reserve chair Jerome Powell back in 2011.

“We defined it as the day after which the federal government would not be able to meet all of its obligations, meaning that if policymakers didn’t act by the X-date, then the default would occur the next day. And we quickly realized that that was incredibly difficult for people to understand,” Akabas said.

It was then revised, supposed to be known as the day on which the government doesn’t meet all of its obligations, he said.

HOW IS THE DATE CALCULATED?

This is where bureaucrats really wonk out. They study things like the Daily Treasury Statement, which offers a detailed accounting of the government’s coffers and provides insight into the movement of money.

Treasury’s Office of Fiscal Projections works with career staff from the Offices of Tax Analysis, Economic Policy and Debt Management to produce a forecast of when the government will exhaust its resources.

Just like everyday Americans who tally up their upcoming bills, the government knows a lot about its coming obligations. And it’s not just about servicing its existing debts.

For instance, on June 1, Treasury will have to pay out $47 billion in Medicare payments, $12 billion in military and civil retirement benefits and $12 billion in veterans benefits, according to a BPC analysis of Daily Treasury Statements.

On the next day, the agency will have to pay out $27 billion in Social Security and Medicaid payments.

WHAT ELSE CAN AFFECT THE X-DATE?

All sorts of factors — even the weather.

This year, for example, taxpayers in areas that experienced weather disasters — including California, New York and large swaths of the South — have been granted filing extensions for the 2022 tax season.

That means delayed income tax payments coming in that can reduce cash flow.

A big infusion of quarterly tax payments is expected to come in on June 15, which could help tide the country over for weeks if the Treasury can hold out that long. But that’s looking increasingly less likely.

WHO’S QUESTIONING THE X-DATE?

Some Republicans are openly questioning Yellen’s calculations on when the government might no longer be fully able to pay its bills.

How far are lawmakers willing to go to test that theory? Are they less willing to compromise if they don’t believe an economic calamity is right around the corner?

“Everybody’s relying on Janet Yellen to tell us this magical day. Show us. Show us the math,” said Rep. Byron Donalds, R-Fla.

When asked if that sentiment was in the back of his mind during negotiations, Donalds replied, “I think it’s in the back of everybody’s mind.”

After Yellen on Friday moved her projection of the earliest date that the U.S. could default from June 1 to June 5, Rep. Andy Biggs, R-Ariz., took to Twitter to complain, saying: “Yellen said it was June 1 earlier this WEEK. Republicans won’t be intimidated by her manipulation tactics.”

House Speaker Kevin McCarthy, R-Calif., asked about the X-date by Larry Kudlow on Fox Business on Wednesday, said that “whoever is the secretary of the Treasury, I’m going to take whatever date they say.”

Another lead GOP negotiator, Rep. Patrick McHenry, R-N.C., said he, too, believes Yellen.

“She’s a straight shooter and I don’t think there’s any wiggle room for us,” McHenry said.

___

Associated Press writers Kevin Freking and Seung Min Kim contributed to this report.

United States News

Associated Press

Idaho group says it is exploring a ballot initiative for abortion rights and reproductive care

BOISE, Idaho (AP) — A new Idaho organization says it will ask voters to restore abortion access and other reproductive health care rights in the state after lawmakers let a second legislative session end without modifying strict abortion bans that have been blamed for a recent exodus of health care providers. “We have not been […]

31 minutes ago

Associated Press

An Alabama prison warden is arrested on drug charges

ATHENS, Ala. (AP) — The warden of an Alabama prison was arrested Friday on drug charges, officials with the state prison system confirmed. Chadwick Crabtree, the warden at Limestone Correctional Facility, was charged with the manufacturing of a controlled substance, possession of marijuana, possession of a controlled substance, and possession of drug paraphernalia, according to […]

44 minutes ago

Associated Press

South Africa man convicted in deaths of 2 Alaska Native women faces revocation of U.S. citizenship

ANCHORAGE, Alaska (AP) — Federal prosecutors want to revoke the U.S. citizenship of a South Africa man convicted of killing two Alaska Native women for allegedly lying on his naturalization application for saying he had neither killed nor hurt anyone. Brian Steven Smith, 52, was convicted earlier this year in the deaths of the two […]

50 minutes ago

Associated Press

10-year-old boy confesses to fatally shooting a man in his sleep 2 years ago, Texas authorities say

AUSTIN, Texas (AP) — A 10-year-old boy has confessed to an unsolved killing in Texas, telling investigators that he shot a man he did not know while the victim slept, authorities said Friday. The boy, who was just shy of his eighth birthday when the man was shot two years ago, has been evaluated at […]

54 minutes ago

Associated Press

Man who won primary election while charged with murder convicted on lesser charge

LEBANON, Ind. (AP) — A central Indiana man who won a primary election for a township board position while charged with killing his estranged wife has been found guilty of the lesser charge of voluntary manslaughter. A Boone County jury convicted Andrew Wilhoite, 41, of Lebanon on Thursday, local news outlets reported. Wilhoite was charged […]

1 hour ago

Associated Press

Iowa governor signs measure increasing compensation for Boy Scouts abuse victims

DES MOINES, Iowa (AP) — Iowa men who were victims of child sexual molestation while they were in the Boy Scouts of America could get higher legal compensation under a measure lawmakers approved and the governor signed into law Friday. The legislation, which retroactively waives the statute of limitations for victims filing a civil claim […]

2 hours ago

Sponsored Articles

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

It’s complicated: ‘X-date’ calculations aim to zero in on when the US may run short of cash