U.S. could face default by August if Congress doesn’t address debt ceiling, Bessent says

Washington — Treasury Secretary Scott Bessent told Congressional leaders Friday that the federal government could be unable to pay its bills as soon as August if Congress doesn’t act, urging lawmakers to address the debt limit by mid July.

In a letter to House Speaker Mike Johnson, Bessent said after reviewing April tax filings, “there is reasonable probability that the federal government’s cash and extraordinary measure will be exhausted in August,” noting that Congress is scheduled to be in recess. 

“Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July, before its scheduled break, to protect the full faith and credit of the United States,” Bessent said.

The so-called “X-date” marks when the government could run out of borrowing power and face an unprecedented default without action from Congress to address the debt limit, which caps how much the Treasury can borrow to pay the government’s obligations. 

Lawmakers are pursuing a massive legislative package to enact President Trump’s agenda while addressing the debt ceiling. And while GOP leaders have aimed to get the measure to the president’s desk in the coming weeks, setting their own deadlines to do so, the X-date has widely been seen as the real deadline and most serious motivator. 

The debt ceiling was last addressed in 2023, when Congress suspended it until Jan. 1, 2025, under the Fiscal Responsibility Act. Since January, the Treasury Department has been using “extraordinary measures” to pay its bills and extend the date when it will run out of money. 

Bessent warned that a “failure to suspend or increase the debt limit would wreak havoc on our financial system and diminish America’s security and global leadership position.” 

And he noted waiting until the last minute to address the debt limit “can have serious adverse consequences for financial markets, business, and the federal government.”

The U.S. national debt currently stands at more than $36 trillion, and raising the debt limit doesn’t greenlight new spending, but allows the government to pay what it already owes. 

The assessment comes after an analysis from the Congressional Budget Office estimated in March that the federal government could be unable to pay its bills as soon as August, while noting that if the government’s borrowing needs are “significantly greater” than projections, the Treasury Department’s resources could be exhausted as early as late May or June.