Looming X-date for U.S. default on the debt projected to arrive this summer

by Jennifer Shutt, Daily Montanan

March 26, 2025

WASHINGTON — President Donald Trump and Congress have until August or September to reach agreement and act on the debt limit, the Congressional Budget Office forecast Wednesday.

Otherwise the United States would default for the first time in history, likely leading to a global financial crisis.

The nonpartisan CBO projection is similar to an estimate published earlier this week by the Bipartisan Policy Center think tank, which expects the X-date will occur between mid-July and early October.

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The previous debt limit suspension expired in January, but the Treasury Department has been able to keep paying all the government’s bills through accounting maneuvers called extraordinary measures. When those run out, the country would hit the X-date and a default would begin.

The four-page CBO report says the default range “is uncertain” because how much money the federal government brings in as well as how much it spends at a given time is difficult to track.

“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,” the report states. “Conversely, if borrowing needs fall short of the amounts in CBO’s projections, the extraordinary measures will permit the Treasury to continue financing government activities longer than expected.”

GOP bill on tap

Republicans in Congress are hoping to approve a massive bill in the months ahead that would extend the 2017 tax law, creating $4.5 trillion in new deficits. The package is also supposed to appropriate hundreds of billions of dollars to the Department of Defense and border security initiatives.

GOP lawmakers hope to pay for some of those increases in the deficit through spending cuts, but are far from agreement on how best to do that.

The debt limit allows the Treasury Department to borrow money to pay all of the country’s bills in full and on time. The federal government must borrow money to pay for spending that Congress has approved that isn’t funded by taxes or other fees.

During the last full fiscal year, that imbalance between revenue and spending, also called the deficit, totalled $1.8 trillion. Over decades, annual deficits have added up to a $36.2 trillion national debt.

Congress failing to raise or suspend the debt limit before the default date would limit the Treasury Department to spending only the cash it had on hand, a scenario with much broader implications than a partial government shutdown.

A default could lead the federal government to delay or simply never make payments on thousands of federal accounts, including Social Security, Medicare, Medicaid, troop pay, federal employee salaries and much more.

The Treasury Department writes on its website that not raising the debt limit by a specific dollar amount or suspending the debt limit through a future date “would have catastrophic economic consequences.”

A Government Accountability Office report lists off several negative repercussions of a default, including that it could trigger runs on banks and money market funds, that it would likely reduce lending to households and businesses, that it would lead to a substantial downgrade to the country’s sovereign credit rating and that it would likely lead to a significant and potentially long-lasting recession.

Treasury projection in May

Treasury Secretary Scott Bessent plans to send his department’s default date projection to Congress in May, though he wrote in a March letter that lawmakers should get to work sooner rather than later.

“The period of time that cash and extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts and the normal changes of forecasting the payments and receipts of the U.S. government months into the future,” Bessent wrote. “We expect to provide an update during the first half of May, after the majority of receipts from the April income tax filing season have been received.”

Bessent then urged lawmakers “to act promptly to protect the full faith and credit of the United States.”

Republican leaders in Congress and the Trump administration have just a few more months to decide how they want to handle this year’s debt limit debate.

House Republicans included a proposal in their budget resolution to raise the debt limit by $4 trillion later this year, when GOP lawmakers draft the bill to extend the 2017 tax cuts. But the Senate has yet to agree to that blueprint.

Republicans raising the debt limit through the complicated budget reconciliation process would require support from nearly every GOP lawmaker in Congress, since the party holds a paper-thin majority in the House and just 53 seats in the Senate.

Nearly two years ago, when Congress sent the last debt limit bill to the White House, 71 House Republicans and 31 GOP senators voted against approval.

The other option is for Republicans and Democrats to negotiate a bipartisan agreement on the debt limit that can get the support of at least 60 senators to move past the legislative filibuster.

Last updated 10:57 a.m., Mar. 26, 2025

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