Jan 25 (Reuters) – Just days into a new session of the U.S. Congress, lawmakers are facing what may be the most important legislative issue of 2023: the national debt limit.
Here are some key moments in the coming months:
Next week, the Treasury Department will release a quarterly document outlining how the government plans to budget for the next three months. This document, which contains information about the debt that the Treasury Department will issue, can clarify the timing of a possible default. This is a more general overview of the quarterly budget that will be released on January 30.
However, analysts caution that it is too early to set an exact date, which depends on several factors, including tax receipts.
In March or April, the Congressional Budget Office will release new budget projections for fiscal years 2023 and 2024 based on current tax and spending laws and economic projections. These forecasts provide a nonpartisan view of government cash flows and provide additional clues about how long the Treasury can continue to pay its bills.
Additionally, President Joe Biden is likely to unveil his fiscal year 2024 budget request in the second quarter. Last year, this happened in early March.
The proposal will become a staple of any negotiations with Republicans, who are likely to want significant cuts to sign the debt ceiling increase into law.
The federal income tax return deadline 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 revenues collected by the government, the longer the government can meet its obligations.
Treasury Secretary Janet Yellen has set June 5 as the earliest possible X date, marking the end of the “suspension period” in implementing extraordinary cash management measures.
Still, analysts generally agree that the government won’t default until a later date, with the U.S. Treasury presenting a worst-case scenario to lawmakers.
If the U.S. Treasury makes it to June 30 without any missed payments, it will receive a grace period of approximately $145 billion, when investments made by a U.S. account called the Civil Service Pension and Disability Fund are due. did
Normally, those funds are reinvested, but the Treasury Department has said it can use the proceeds to help make required payments.
Most analysts see the actual X date occurring between July and October.
In addition to shaking global financial markets, reaching Date X without a deal could wipe out some government payrolls and social security benefits and bond repayments.
Reporting by Graham Slattery in Washington and Karen Bertel in New York. Additional reporting by David Lauder in Washington, editing by Ross Calvin and Daniel Wallis
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