The X-Date is the day the federal government can no longer pay its bills. This is a point-in-time prediction based on the Treasury’s current cash holdings and expected revenue streams. Failure to meet debt payments results in default. Such an unprecedented event would have far-reaching consequences.
The Treasury Department monitors the federal balance sheet. Treasury officials sound alarm when government funds approach insolvency. Two courses of action are available in this instance: raise taxes or adjust the debt ceiling. The latter is most commonly utilized.
By adjusting the debt ceiling, Congress enables the government to issue additional debt. The Treasury Department can then sell new bonds to investors. These funds support key programs, fulfill existing promises, and prevent default.
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