For about 48 hours last week, it looked like a debt ceiling fight in 2025 would be averted as ideas were floated to push the issue off until 2027 or 2029 (or even forever).
But it was not to be.
Democrats and about three dozen of the most conservative Republicans made common cause to reject a plan that included a debt ceiling extension. That led to passage late Friday of a bill that averted a shutdown while leaving the debt ceiling issue untouched.
Now, with default still on the table for 2025, the next step in that process now comes on Jan. 1 when -- as per a 2023 agreement between President Joe Biden and then-House Speaker Kevin McCarthy -- a temporary suspension of the debt limit ends and a cap on the US government borrowing authority will be back in place.
The debt limit will then have been reached, but the Treasury Department has the means to delay a default for a few months using a process called "extraordinary measures."
Basically, they can move money around various government accounts to delay an actual default on U.S. obligations. But it only works for a short period.
"The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors," Treasury Secretary Janet Yellen wrote in 2023 during the last standoff.
All things considered, questions about government default could again weigh on the economy in the early months of 2025. Here's some of the early thinking about how the next round could play out.
What happens after Jan. 1 will be what is essentially an educated guessing game about when the moment comes that these extraordinary measures run out and an actual default could be in the offing.
The Treasury Department has traditionally offered very limited estimates of that possible "X-date" leaving others to weigh in.
One recent analysis from the Economic Policy Innovation Center authored by two former Republican Capitol Hill staffers offered mid-June as the time to watch.
But the paper was quick to add that "it is entirely possible that the debt ceiling will be reached prior to June 16, and the Congress will need to act earlier than many are expecting."
The Bipartisan Policy Center (BPC) has also done extensive work to project possible X-date ranges. And while BPC hasn't yet released a formal analysis for 2025, the group's managing director of Economic Policy, Rachel Snyderman, reminded us in an episode of Yahoo Finance's Capitol Gains podcast that workarounds only delay default for an unknown amount of time.