The federal government could default on its debt as soon as August without action from Congress, the Congressional Budget Office (CBO) estimated on Wednesday.
In the latest projection, the nonpartisan budget scorekeeper said on Wednesday morning that Congress must act to raise or suspend the debt ceiling by August or September, but said that deadline could shift based on federal revenue and sending.
If the federal government needs to borrow more money than CBO has projected,, the Treasury Departments's resources “could be exhausted in late May or sometime in June, before tax payments due in mid-June are received or before additional extraordinary measures become available on June 30.”
The debt limit caps how much money the Treasury can owe to pay the country’s bills.
It was last suspended in 2023 as part of a bipartisan bill struck between former President Biden and GOP leadership, staving off the threat of national default through early 2025.
The Treasury Department has been implementing so-called “extraordinary measures” to buy time for Congress and the White House to reach a deal to address the debt ceiling.
While it’s difficult to pinpoint a hard X-Date, projections become more precise the closer the government arrives to running out of cash. Revenue is also seen as a key factor in the timeline as the tax season heats up.
