U.S. expected to hit debt limit, kicking off monthslong countdown to possible default

Washington — The countdown toward a possible U.S. government default is in the offing — with frictions between President Biden and House Republicans raising alarms about whether the U.S. can sidestep a potential economic crisis.

The Treasury Department projects that the federal government will on Thursday reach its legal borrowing capacity of $38.381 trillion, an artificially imposed cap that lawmakers have increased roughly 80 times since the 1960s. Markets so far remain calm, as the government can temporarily rely on accounting tweaks to stay open, meaning that any threats to the economy are several months away. Even many worried analysts assume there will be a deal.

But this particular moment seems more fraught than past brushes with the debt limit because of the broad differences between Mr. Biden and new House Speaker Kevin McCarthy, who presides over a restive Republican caucus.