By Gram Slattery and Karen Brettell
(Reuters) – Just days into the new session of the U.S. Congress, lawmakers are grappling with what will be perhaps the most pivotal legislative issue of 2023: the national debt limit.
Here are some highlights over the coming months:
The Treasury will publish a quarterly paper next week outlining how it plans to fund the government over the next three months. The document, which includes information on debt to be issued by the Treasury Department, could shed light on the timing of a possible default. Here’s a more general overview of the quarterly funding that will be released on January 30th.
Analysts caution, however, that it will still be too early to set an exact date, which will depend on a number of factors, including tax revenue.
In March or April, the Congressional Budget Office will issue new budget estimates for fiscal year 2023 and fiscal year 2024, based on current tax and spending laws and economic projections. The forecasts will provide a non-partisan view of the government’s cash flows and provide additional clues as to how long the Treasury can continue to pay its bills.
Additionally, President Joe Biden will likely unveil his fiscal year 2024 budget request in the second quarter. Last year, this happened in early March.
The proposal will become a sticking point for any negotiations with Republicans, who will likely require significant cuts to sign the debt ceiling increase legislation.
The deadline for federal income tax returns is April 18. Data on government revenue could be an important factor in determining the so-called “X date,” or the day the government stops paying its bills.
The more tax revenue the government collects, the more the government can meet its obligations.
Treasury Secretary Janet Yellen has set June 5 as the earliest possible X-date, marking it as the end of a “suspended debt issuance period” while emergency cash management measures are in place.
Analysts generally agree, however, that the government will not default until later and that the U.S. Treasury is presenting a worst-case scenario to lawmakers.
If the U.S. Treasury makes it to June 30 without missing payments, it will get a hold on about $145 billion when investments made from a U.S. account known as the Civil Service Retirement and Disability Fund mature.
Normally, those funds would be reinvested, but the Treasury said it could use the proceeds to help make the necessary payments.
Most analysts see the actual X date occurring somewhere between July and October.
In addition to roiling global financial markets, reaching Date X without a deal could cause the loss of some government payrolls and social security benefits and bond repayments.
(Reporting by Gram Slattery in Washington and Karen Brettell in New York; Additional reporting by David Lawder in Washington Editing by Ross Colvin and Daniel Wallis)