In January, the US government hit its legal credit limit of $31.381 trillion and the Treasury Department began taking extraordinary measures to prevent payments from falling behind on its accounts.

That sparked speculation about the X date, the date by which those measures would be exhausted and the government could actually default if the limit on federal borrowing is not lifted. The X date could be reached as early as June, depending on how much money the IRS collects in April from people filing their taxes.

How big is this problem? It seems ominous, right?

Now might be the time to get a little worried as more than three months have passed with little progress. It’s only so long before President Biden and Speaker of the House Kevin McCarthy have to strike a deal to lift the debt ceiling. McCarthy is calling for trillions of dollars in spending cuts over the decade in exchange for a raise, while Biden insists that talks over public finances are not happening with the threat of economy-destroying bankruptcy hovering over lawmakers.

The Democratic president and Republican congressional leader have each tried to assure the public in recent weeks that they don’t want the government of the world’s largest economy to default. But Biden has resisted McCarthy’s calls for negotiations as McCarthy pushes through a plan that cannot pass the Senate with a Democratic majority.

These talks often escalate and come to naught, with major economic damage at stake. But since the 1960s, there have been about 80 deals to raise or suspend the borrowing ceiling. What might make this time different is the degree of political polarization, which could potentially lead to the US government defaulting on payments and trigger a global economic collapse.

What are ‘extraordinary measures’?

To keep the government open, the Treasury Department began a series of accounting maneuvers in January that would cut investment contributions and repayments to pension and health care funds from government employees, giving the government enough financial room to cover its day-to-day expenses. until about June.

By suspending payments, the government can reduce the amount of outstanding debt, allowing the Treasury to continue funding government operations.

What happens if these extraordinary measures are exhausted without a debt limit agreement is unknown. A protracted bankruptcy could be devastating, with markets collapsing and panic-driven layoffs if confidence in a cornerstone of the global economy were to evaporate, the U.S. Treasury said.

How common is this?

Treasury ministers in every government over the past few decades have used these extraordinary measures when necessary, Treasury Secretary Janet Yellen wrote in her first letter about the measures.

The measures were first deployed in 1985 and have been used at least 16 times since then, according to the Committee for a Responsible Federal Budget, a fiscal watchdog.

Why do we have a debt limit?

Before World War I, Congress had to approve every bond issue. The debt limit was created as a temporary solution to fund the war effort without needing a constant string of votes.

Since then, a tool developed to make it easier for government to function has become a source of dysfunction, fueling partisan warfare and creating economic risk as debt has increased over the past 20 years.

How risky is the abyss this time?

It looks alarming and it is unclear how Biden, McCarthy and the Democratic Senate will come to an agreement. A default could lead to millions of job losses, a deep recession that would reverberate globally and, ironically, higher interest rates that would make it more difficult to manage the federal debt.

On Fox News, McCarthy defended his plan in a Sunday interview

by noting that even Sen. Joe Manchin (DW.V.) supported a 1% spending cap on discretionary spending

. McCarthy said Biden was endangering the country by refusing to hold talks.

The idea that he won’t even negotiate for more than 80 days now defaults the country, McCarthy said.

We are the only ones who are responsible and sensitive to this.

Biden called the plan McCarthy unveiled last week wacko, “with a White House analysis showing that the spending caps would hurt children’s education, veterans’ health care, food aid for families and seniors, and cut housing costs for the nation’s poorest households.” The president’s budget plan announced in March would reduce deficits by nearly $3 trillion over the next 10 years, primarily through tax increases on the wealthy and businesses.

America is not a dead-end nation,” Biden said. Take the stand off the table.