Treasury risks payment default as soon as August, CBO says

The Congressional Budget Office warned that the federal government could run out of enough money to pay all of its bills on time as soon as August if lawmakers fail to raise or suspend the debt limit.

The Treasury Department has been using special accounting maneuvers since Jan. 21 to avoid breaching the $36.1 trillion debt ceiling, which kicked in at the start of the year. But the department has yet to offer specific guidance on when those measures will be exhausted.

"If the debt limit remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025," the CBO, a nonpartisan arm of the U.S. legislature, said in a statement Wednesday. "The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from CBO's projections."

The CBO also said that, "If the government's borrowing needs are significantly greater than CBO projects, the Treasury'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."

Going past the so-called X-date would necessitate the Treasury defaulting on "some obligation," then-Secretary Janet Yellen said during the last congressional battle to address the debt limit, in 2023. Scott Bessent, who took the Treasury's helm in January, told lawmakers in his confirmation hearing the U.S. "is not going to default on its debt" with him in the job.

Congressional wrangling

The CBO projection for X-date provides lawmakers with a rough estimate on how much time they have to raise or suspend the debt ceiling to avoid such a crisis.

House Republicans have pushed to include raising the debt limit in legislation to enact President Donald Trump's top priority — extending his 2017 tax cuts, much of which expire at year-end. The House took one step toward that last month, passing a budget proposal that included raising the debt ceiling by $4 trillion.

Senate Majority Leader John Thune on Tuesday said there is "consensus forming" around attaching a debt-limit provision to the tax package as part of a so-called reconciliation bill, which the GOP could pass without Democratic votes. It's not clear, however, whether there's sufficient support among Senate Republicans for addressing the debt limit through that process.

The 2023 debt-ceiling suspension was done on a bipartisan vote.

Earlier this week, the Bipartisan Policy Center released its own X-date estimate, putting it sometime between mid-July and October. Wall Street strategists have estimated the date could fall around late-July to late-August. Some forecasts, however, put the timing as early as late May.

Much depends on tax-collection proceeds, with the April 15 filing date fast approaching. House Ways and Means Committee Chair Jason Smith warned earlier this month that a debt-ceiling breach was possible as soon as mid-May if the Treasury brings in less revenue than expected.