The Deadly Dates of a Debt-Ceiling Standoff

What day will the government default? Nobody knows for sure, but here are a few of the most likely dates.

A statue of former Treasury Secretary Albert Gallatin stands guard outside the Treasury Building in Washington.   
National Journal
Patrick Reis
Sept. 27, 2013, 8:54 a.m.

Nobody in the White House, nobody in Con­gress, and nobody any­where else knows the ex­act date the gov­ern­ment will be­gin de­fault­ing on its debts.

Treas­ury Sec­ret­ary Jac­ob Lew has handed Con­gress an Oct. 17 dead­line for rais­ing the debt lim­it, but he’s only giv­ing them his best guess.

The lack of a fi­nal dead­line could be a prob­lem for Con­gress, which is in the pro­cess of craft­ing a last-minute budget deal to stave off a gov­ern­ment shut­down.

But the debt ceil­ing’s tim­ing doesn’t work like a gov­ern­ment shut­down, where all parties in­volved know months ahead ex­actly when the cur­rent budget will ex­pire. In­stead, de­fault hap­pens whenev­er the Treas­ury doesn’t have the money on hand to pay its in­com­ing bills.

The rate at which those bills ar­rive, however, is vari­able. There are a few dates in the weeks to come where the in­voices will be par­tic­u­larly large, the fin­ances will be par­tic­u­larly tight, and the danger of de­fault will run the highest.

Here are the dates that have ana­lysts at the Bi­par­tis­an Policy Cen­ter es­pe­cially anxious:

Oct. 17-18 — The “X Date”: Lew picked mid­night on Oc­to­ber 17 for a debt-ceil­ing dead­line, and the BPC ana­lysts agree, hav­ing set an “X Date” that starts the first minute of Oc­to­ber 18. From that mo­ment on, the cen­ter says, the gov­ern­ment is at real risk of de­fault at any time, be­cause it will be out of bor­row­ing room and will be wager­ing that its un­pre­dict­able rev­en­ue streams will be enough to cov­er the in­com­ing bills.

Oct. 23 — So­cial Se­cur­ity’s First Hic­cup: The fed­er­al gov­ern­ment owes the na­tion’s seni­ors $12 bil­lion in So­cial Se­cur­ity pay­ments. There are big­ger pay­ments to come, but ima­gine for a mo­ment the polit­ic­al fal­lout of Wash­ing­ton fail­ing to de­liv­er even a tiny frac­tion of what it owes to the eld­erly. That’s the sort of move that gets in­cum­bents tossed out of of­fice, as well as trig­ger­ing an all-out mes­saging blitz to pin the blame on the oth­er party.

Novem­ber 1 — Day of the Debt-Ceil­ing Dead: It all comes to a head at the start of Novem­ber, when Treas­ury will be hit with, at least, a com­bined $58 bil­lion worth of bills. That in­cludes $18 bil­lion in Medi­care pay­ments, an­oth­er $25 bil­lion for So­cial Se­cur­ity, and $12 bil­lion in pay­ments to act­ive mil­it­ary and vet­er­ans. Toss on top of that a $6 bil­lion in­terest pay­ment on the pub­lic debt that comes due Oct. 31, and the BPC ana­lysts see de­fault as near-cer­tain without a raise in the debt ceil­ing.

“I think it’s ex­ceed­ingly un­likely they can make it past Hal­loween,” said Steve Bell, a former top GOP staffer and the dir­ect­or of BPC’s eco­nom­ic-policy pro­ject. “The Lord in­deed has a great sense of hu­mor.”

Read more about BPC’s debt ceil­ing cal­en­dar here.

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