The debt limit, the origins of the X Date, and why it all matters

Note: A version of this episode first ran in 2023.

Every year, the U.S. government spends more money than it takes in. In order to fund all that spending, the country takes on debt. Congress has the power to limit how much debt the U.S. takes on. Once we reach that limit, Congress has a few options so that the government keeps paying its bills: Raise the debt limit, suspend it, or eliminate it entirely.

Which is daunting, because if lawmakers don’t figure something out in time, the ramifications for the global economy could be huge.

Shai Akabas, of the Bipartisan Policy Center, has become something of the go-to expert in calculating the exact date America would hit the wall and not be able to pay all its debts. This day is so terrifying it has a special name, the X-Date.

Today’s episode is about how Akabas and Jay Powell — long before he became chair of the Federal Reserve — worked to create a system to determine the X-Date with the hope of helping us all never reach it.

We also have an update on this year’s looming X-Date, which could arrive as soon as this summer.

Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter.

Listen free at these links: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.

Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.