At the recent pace of debt growth, the U.S. will reach its statutory limit of $16.394 trillion some time in October — just before Americans go to the polls.
The government has ways to stay below that ceiling for a few months, giving lawmakers a grace period. Treasury Secretary Timothy Geithner has said the deadline is early 2013.
But the recent slowdown in economic growth bodes poorly for federal tax receipts. Any pickup in the rate of debt accumulation could pull forward that deadline into the super-charged environment of a presidential election.
If the government is seen as dysfunctional in another debt standoff, the public will likely hold President Obama more liable than Republicans, says Nathan Gonzales, deputy editor of the Rothenberg Political Report.
"There's potential for disproportionate blame on the president vs. the Republicans in the House," he said.
But voters could easily turn on Republicans or Democrats, potentially upending who will control the White House and Congress.
So far this fiscal year, the debt has grown an average of 0.834% a month, putting it on track to hit the limit in late October.
Debt Ceiling And Fiscal Cliff Also on Congress' year-end to-do list will be a budget accord that steers the U.S. away from the so-called fiscal cliff of steep tax hikes and automatic spending cuts, largely stemming from last summer's debt ceiling deal.
Without action, the fiscal cliff could send the U.S. back into recession, the Congressional Budget Office has warned. Uncertainty over the outcome may already be slowing growth by discouraging consumer spending and business investing and hiring.
The stakes are rising. Fitch last week reiterated its warning that the U.S. would lose its AAA credit rating without a "credible" deficit-reducing plan. Paired with last year's Standard & Poor's downgrade, a Fitch cut would add chaos in financial markets and raise U.S. borrowing costs.
But the fiscal cliff's tax hikes and spending cuts won't kick in until Jan. 1 at the earliest. The debt total, which changes daily, adds extra uncertainty. On June 13, debt subject to the limit totaled $15.695 trillion.
Last year, the federal government hit the limit in mid-May. The Treasury was able to buy another 2-1/2 months — drawing down cash balances, suspending retirement fund investments and redeeming securities — before lawmakers had to act.
How the economy performs will factor into the pace of debt accumulation. If job and wage growth stay anemic, that would depress government revenue from personal income taxes.
Corporate profits are another variable. Earnings growth slowed in Q1 from Q4, the Commerce Department said last month. But federal receipts from corporate profits so far are ahead of last year's pace.
The weak stock market could hurt capital gains receipts, unless a rush to cash out holdings temporarily boosts tax collection.
Another mitigating factor is the dive in Treasury yields to record lows, easing debt servicing costs.
The U.S. government in May ran a $124.6 billion deficit, more than double the red ink a year earlier and a sharp reversal from April's $59.1 billion surplus. But so far in fiscal 2012, receipts are up 5.4% from this time in 2011 and outlays are down 0.1%.
Whenever it happens, a debt fight seems likely. House Speaker John Boehner has said he will insist on significant spending cuts and reforms. White House officials have signaled they want no conditions for a ceiling hike.
If a vote to raise the debt ceiling is required before the election, Jack Ablin, chief investment officer for Harris Private Bank, doesn't see how both sides are going to cooperate.
That could hurt all incumbents.
"It would engender a kick-the-bums-out mentality," he said.
Rothenberg's Gonzales sees lawmakers doing everything they can to avoid a pre-election fight because they would prefer campaigning rather than debating in Washington. Republicans also wouldn't want to expose internal divisions on the issue, he added.