CBO’s debt limit projection puts Congress on the clock
Now comes the hard part: Hill Republicans must decide whether to raise the government’s borrowing authority on their own—or negotiate with Democrats who are sure to drive a hard bargain.
The Congressional Budget Office on Wednesday projected that the U.S. will breach the debt ceiling and risk default in August or September, setting a hard deadline for Congress to act.
Allow me to explain: The estimate—known in Washington parlance as the “X date”—gives House Speaker Mike Johnson (R-La.) and John Thune (R-S.D.) a fresh sense of urgency to raise the government’s borrowing limit.
The task is essential to avoid payment delays or a default on U.S. debt and clear the way for the GOP to enact President Donald Trump’s legislative agenda.
Republicans are weighing whether to include a debt limit increase in the reconciliation bill they’re writing to extend Trump’s 2017 tax cuts or to pursue a bipartisan agreement with Democrats.
The first option avoids giving Democrats leverage but could complicate the budget reconciliation process.
The second might be faster procedurally but could force Republicans to accept policy concessions that alienate conservatives—potentially costing GOP votes on reconciliation if members oppose cutting deals with Democrats while their party controls the government.
What they’re saying: CBO, the legislative branch’s nonpartisan budget scorekeeper, said the exact date the government will run out of money is uncertain since tax collections and federal spending could be higher or lower than expected.
If the Treasury needs to borrow more than CBO projects, it could hit the limit as early as late May or sometime in June—before mid-June tax payments or additional resources become available at the end of the month.
If borrowing needs are lower, the Treasury can stretch its timeline using extraordinary measures—short-term workarounds that let the department shift money to keep the government running after hitting the debt ceiling.
If Congress doesn’t raise or suspend the debt limit in time, the government won’t be able to pay all its bills.
In his own words: “The need to raise the debt ceiling must not be used as a pretext to deliver giveaways to billionaires or to undermine the essential programs on which working families rely,” Rep. Brendan Boyle (Pa.), the top Democrat on the House Budget Committee, said in a statement. “Democrats are ready to work across the aisle to prevent a catastrophic default. But Republicans must work with us to protect Social Security, Medicare, and Medicaid.”
In the know: The debt limit caps how much the Treasury Department can borrow to meet existing financial obligations.
These include payments for Social Security, Medicare, military salaries, tax refunds, interest on the national debt, and other expenses already approved by Congress.
The debt limit doesn’t authorize new spending.
When the U.S. hits the limit, the Treasury first draws down its cash on hand.
Then, to buy time, it uses “extraordinary measures”—temporary accounting tools that keep payments flowing until Congress acts.
The economic and political consequences of default would be catastrophic.
Global markets could lose faith in the U.S. dollar and Treasury securities, leading to higher borrowing costs and financial instability.
Interest rates could spike, undermining consumer confidence and potentially triggering a recession.
Social Security checks, veterans’ benefits, military salaries, and other critical payments could be delayed.
The full faith and credit of the U.S. government would be damaged. (This isn’t theoretical: in 2011, the U.S. credit rating was downgraded for the first time due to partisan brinkmanship.)
Even getting close to the X date—without default—can shake markets, disrupt Treasury auctions, and erode public trust in government.
How we got here: Former President Joe Biden signed a law in June 2023 suspending the debt limit through January 1, 2025, after a high-stakes negotiation with then-Speaker Kevin McCarthy (R-Calif.), whose Republican majority demanded spending concessions in exchange for raising the cap.
The law allowed the Treasury to borrow whatever funds were needed to meet the government’s obligations during that period.
Treasury has been using extraordinary measures since the suspension expired.
Not so fast: As debt limit politics return to the fore, so does the debate over whether the mechanism should exist.
Economists, policy experts, and lawmakers across the political spectrum—including Boyle—have called for reform or outright elimination of the debt ceiling.
Critics argue that the limit is redundant since Congress already authorizes spending and revenue levels and enables partisan factions to threaten default as a political weapon.
By the numbers: The debt ceiling has been raised, suspended, or revised more than 100 times since its creation—under both Democratic and Republican administrations.
The process was once routine but became politicized in the early 2010s.
Looking ahead: Johnson and Thune have expressed interest in passing a compromise budget by April 11—the final legislative day before the Easter recess.