Treasury Secretary Urges Congress to Raise Debt Ceiling by Mid-July/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Treasury Secretary Scott Bessent warned that the U.S. could default by August without congressional action to raise or suspend the debt ceiling. He urged lawmakers to act by mid-July, citing severe economic risks. His warning comes as Republicans weigh pairing the increase with tax and border policy changes.
Debt Ceiling Warning Quick Looks
- U.S. could run out of cash by August
- Treasury urges action by mid-July deadline
- Failure could destabilize markets and national security
- Extraordinary measures already in effect
- August “X-date” based on tax receipt shortfall
- Bessent follows up on Yellen’s emergency policy
- Letter sent to House Speaker Mike Johnson
- Trump previously demanded debt ceiling action
- GOP eyes pairing it with tax and border reforms
- Bipartisan Policy Center confirms mid-July risk
Treasury Secretary Urges Congress to Raise Debt Ceiling by Mid-July
Deep Look
Treasury Warns of Looming U.S. Default Without Debt Ceiling Action
WASHINGTON — Treasury Secretary Scott Bessent issued a stark warning on Friday, telling Congress that the United States could default on its financial obligations as early as August unless the debt ceiling is raised or suspended by mid-July.
In a formal letter to House Speaker Mike Johnson, Bessent said Congress must act swiftly to avoid catastrophic consequences for the economy.
“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,” Bessent wrote.
Default Risk Intensifies as “X-Date” Approaches
Bessent cited the latest tax receipts as one reason why the Treasury’s estimated “X-date” — the point when funds run out — could hit in early August. He warned that delays, even in the final weeks, could rattle financial markets and undermine confidence in the federal government.
The Bipartisan Policy Center issued a similar warning in March, projecting the U.S. could exhaust its cash reserves by mid-July if Congress does not act in time.
Extraordinary Measures Already in Place
Since the debt ceiling was reinstated in January, the Treasury has implemented extraordinary measures to avoid default. These include halting contributions to federal employee retirement and disability funds, freeing up cash for critical government operations.
These stopgaps were first initiated by former Treasury Secretary Janet Yellen, and Bessent has continued to update Congress regularly on their use.
Trump and GOP Face Political Crossroads
President Donald Trump has insisted that any legislation to avoid default must include a provision to raise or suspend the debt ceiling. However, the Republican Party has historically resisted debt limit increases, especially without major spending cuts.
“Anything else is a betrayal of our country,” Trump said in December, criticizing previous deals that failed to address the issue.
The White House and Republican leadership are currently discussing a massive package combining tax cuts, border security measures, and a debt ceiling increase, in hopes of striking a political compromise.
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