WASHINGTON—The United States is approaching its debt ceiling, commonly known as the X-date, potentially as early as August unless Congress and the White House broker an agreement, according to a Congressional Budget Office (CBO) report published Wednesday.
As that critical date nears, the government will run out of its financial resources to cover its obligations following the exhaustion of “extraordinary measures,” accounting tactics employed to extend current funds. Should no agreement be reached, Washington faces the grave risk of defaulting on its debt obligations unless lawmakers and the administration, led by President Donald Trump, either elevate the borrowing limit or completely discard the concept of the debt ceiling.
The debt ceiling was reset on January 2, following a period of suspension under the Fiscal Responsibility Act of 2023. “The Treasury has already reached the current debt limit of $36.1 trillion, thereby prohibiting any further borrowing under standard procedures,” the CBO report notes.
A separate analysis from the Bipartisan Policy Center warns that, without congressional action to increase or suspend the debt limit, the U.S. could face a cash shortfall by mid-July. President Trump has previously insisted that a clause addressing the debt limit must be part of any legislation intended to foreclose government shutdowns, labeling any alternative as a “betrayal of our country” in a December statement. However, the latest legislative agreement did not tackle the debt ceiling issue.
An extended default could have dire economic consequences including the potential loss of millions of jobs and could disrupt vital government payments. This would affect millions of families relying on benefits such as Social Security, and also impact veterans and military households. Additionally, government operations like air traffic control and food safety could suffer major disruptions.
Historically, despite looming perils, Congress and the president have managed to avoid defaulting on obligations. The country has witnessed lengthy disputes over the debt ceiling in the past, notably in 2011 and again in 2023 when Congress opted to suspend the debt limit until January 1, 2025, instead of raising it by a specified amount.
Upon the debt ceiling’s reinstatement in January, then-Treasury Secretary Janet Yellen initiated “extraordinary measures” to prevent hitting the ceiling. These measures have included halting payments into federal employee pension and disability funds to counterbalance the cash shortfall. Treasury Secretary Scott Bessent continues to brief Congress about these measures to avert breaching the debt ceiling.
Should these measures prevail without a change in the debt limit, the CBO predicts that the government’s capacity to borrow could be exhausted between August and September 2025. However, this forecast remains tentative as revenue collection and spending patterns may vary.
The House has appended a proposal of a $4 trillion increase to the debt ceiling in a Republican budget plan that paves the way for the continuation of individual tax cuts initiated during Trump’s first term. However, this increase must still gain Senate endorsement, and it remains uncertain whether the Republican-dominated Senate will assent. GOP leadership across both chambers continue to deliberate on a viable path, including a recent meeting at the White House.
The Democrats have expressed willingness to collaborate with Republicans on increasing the debt ceiling but oppose using it as grounds for tax benefits that predominantly favor the wealthiest individuals while undermining welfare programs vital to many. “Democrats are prepared to cooperate to prevent a catastrophic default. However, Republicans must collaborate to safeguard Social Security, Medicare, and Medicaid,” emphasized Pennsylvania Rep. Brendan Boyle, the senior Democrat on the House Budget Committee.