When is the deadline for Congress to come up with a solution on the debt limit?
LEILA FADEL, HOST:
We know the U.S. is running out of money to pay its bills. What we don't know is when that will happen or, in other words, what the deadline is for Congress to come up with a solution on the debt limit. Nick Fountain from our Planet Money podcast hung out with some policy experts who are trying to figure out that exact detail.
NICK FOUNTAIN, BYLINE: The wonks are at the Bipartisan Policy Center, and they're led by Shai Akabas, who doesn't really like to brag about his expertise.
SHAI AKABAS: Being the world expert on the debt limit is a little like being the world's expert on termites. Nobody really wants to...
AKABAS: ...See you around or hear from you.
FOUNTAIN: He's been at it for a while - since 2011, a debt ceiling fight with many parallels to today's. Back then, now-chair of the Federal Reserve, Jay Powell, was working with Akabas, and Akabas says Powell realized that Republicans didn't trust the information that the Treasury Department was giving out about the debt ceiling, especially this detail - when Treasury could run out of money.
AKABAS: So right or wrong, they were viewed as potentially not an objective source as to the fundamentals of the debt limit and what they were asking Congress to do.
FOUNTAIN: Akabas and Powell thought, maybe we could be the objective source. It's worth a shot. The first piece of information they needed to audit was the date the U.S. could run out of money to pay its obligations, what they called the X Date. Akabas and Powell pored over months of Treasury statements to try to figure out the cash flows of the U.S. government. And they calculated that the U.S. could be out of money as soon as August 2 - 35 days away. Then they headed to Capitol Hill to try to answer any questions lawmakers had, questions like...
AKABAS: Why do we have to act? Couldn't we do this? Or couldn't we do that? Or couldn't we just, you know, go over the cliff and see what happens?
FOUNTAIN: And they would tell lawmakers, the truth is nobody knows exactly what's going to happen when we go off that cliff.
AKABAS: Beyond the X Date is a grave unknown. We've never been there before in the modern history of our country, and we just don't know what some of the reactions to that action would be.
FOUNTAIN: But they'd say the consequences could be dire. The market for U.S. debt is the foundation for basically all other financial markets. If a debt ceiling impasse lasted for more than a few days, think drops in financial markets, increases to borrowing costs, downgrades to the U.S. credit rating. And all for what? An extra few days of negotiation? Not worth it. The peak of their lobbying efforts came just two weeks before that year's X Date. Powell was invited to a closed-door meeting of the entire Republican caucus. Akabas wasn't, but he heard some stories.
AKABAS: I was told there was some yelling. I was told there may have been some expletives (laughter).
FOUNTAIN: He says it was in that room that Republicans got on board with a deal they'd eventually negotiate with the White House.
When was the deal struck? Do you remember how close to the - that August 2 X Date?
AKABAS: I believe the deal passed on August 2. So it was a last-minute deal.
AKABAS: Congress really only tends to act when they have their backs up against a wall.
FOUNTAIN: Seriously. I thought journalists liked deadlines, but wow.
AKABAS: Congress really likes deadlines.
FOUNTAIN: It was true in 2011, and it'll likely be true this year. Akabas and his team will come out with their forecast of this year's X Date later this week.
Nick Fountain, NPR News. Transcript provided by NPR, Copyright NPR.