Capitol Hill braces for high-stakes showdown over $36T US debt crisis

FIRST ON FOX: A potential showdown over the U.S. debt limit is projected to hit Capitol Hill by mid-June, a new calculation suggests.

The Economic Policy Innovation Center (EPIC) released a new model Monday that said it is “possible” the U.S. government would exhaust the ability to pay its debts by June 16, 2025.

“The government is projected to run about a $2 trillion deficit next year. And so that means that the spending obligations that Congress and the government have incurred are a lot more than what we’re going to bring in tax revenues,” Matthew Dickerson, director of Budget Policy at EPIC, told Fox News Digital. “To be able to pay the things the government has promised to pay on time, you need to increase the debt limit.”

An agreement struck by President Biden and former House Speaker Kevin McCarthy, R-Calif., last year suspended the debt limit through January 2025. In that time, the national debt surpassed $36 trillion.

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EPIC’s analysis projected that “extraordinary measures” that can be invoked by the Treasury Department to avoid national default can carry the U.S. for roughly six more months at most, until a day known as the “X-date.”

Failure to raise the debt limit could lead to major spirals in the U.S. and global economies. 

Biden and McCarthy’s deal was struck in late May of last year, just days ahead of a projected federal default on June 5. By that point, credit agency Fitch had already downgraded the U.S.’ longstanding AAA credit rating to AA+, temporarily roiling domestic financial markets.

When asked if he was bracing for another 11th-hour agreement, Dickerson pointed out that Congress already has a litany of urgent legislative priorities to start off next year even before debt limit talks.

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“It’s going to be a struggle for Congress to be able to deal with this,” he said.

However, those negotiations can also be an ideal opportunity for Republicans to negotiate major deficit reduction ideas into law, EPIC’s paper argued.

President Biden, right, and former House Speaker Kevin McCarthy famously had a monthslong standoff over the debt limit. (AP Photo/J. Scott Applewhite / Carolyn Kaster, File)

“Reaching the debt limit should be a wake-up call and a signal to do something, sound the alarm,” Dickerson said.

The report said debt limit talks…