Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. The debt ceiling debate is now squarely atop Washington’s policy agenda, with the U.S. government likely hitting its borrowing limit today. Look for Treasury to confirm that it’s activating “extraordinary measures” to keep paying the government’s bills. Just how long can Treasury buy time for Congress to strike a deal to raise the debt limit? The window may be smaller than first expected thanks to Biden administration and Fed policy moves weighing on the government’s finances. Victoria Guida and I have a new piece this morning that breaks down some of the factors that could influence the timing of the debt limit “X date,” the deadline for when the government will be unable to meet all its obligations. The Bipartisan Policy Center, a go-to think tank for X-date projections, is looking at the Education Department’s decision to extend the freeze for federal student loan payments potentially into this summer – a policy that has halted government inflows from millions of borrowers. The group is also weighing the effects of Fed rate hikes and the extent to which they’ve increased the government’s borrowing costs. “On both of these counts, you’re talking about tens of billions of dollars,” said BPC’s director of economic policy, Shai Akabas. BPC last year said it was unlikely the X date would land before the third quarter. The think tank is now guessing that it could hit closer to the middle of the year. BPC plans to update its estimate when CBO releases budget projections in the coming weeks. A word of caution — The interplay of many factors will decide the ultimate deadline, including the upcoming tax season and the effects of inflation. As Treasury Secretary Janet Yellen warned lawmakers last week, the time the U.S. has left to avoid a default is subject to “considerable uncertainty.” “There’s no reason why anyone should be complacent about how much time they have,” former CBO Director Douglas Holtz-Eakin, now president of the American Action Forum, told MM. The shadow of the debt ceiling fight is beginning to loom over government programs like federal food assistance, which Democrats are warning may be at risk as Republicans seek budget cuts. POLITICO’s Meredith Lee Hill reports that Rep. Jim McGovern, a top Democrat on the House Agriculture and Rules Committees, is already trying to rally support to protect programs including SNAP, formerly known as food stamps. We’re in the home stretch — Happy Friday Eve. Please send tips to zwarmbrodt@politico.com.
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