WASHINGTON — The US could default on its $36 trillion debt as early as July and no later than October without congressional action, according to a study released Monday.
The Bipartisan Policy Center estimated that members of Congress will have to vote to increase the debt ceiling before the limit is breached for the federal government to be able to keep paying its bills on time.
The four-month window reflects multiple factors that the nonpartisan group analyzed, including the amount of tax revenue collected starting in April, the devastation wrought by the Atlantic hurricane season beginning in early summer, tariff revenues and the overall strength of the US economy.
Spending cuts by the Department of Government Efficiency (DOGE), which Republican lawmakers are seeking to codify later this year, could also affect when the government hits the debt ceiling, the group added.
“Lawmakers cannot afford to delay action on the debt limit,” Bipartisan Policy Center vice president of economic policy Shai Akabas said.
“Congress has a full plate in 2025, but addressing debt limit well ahead of the X Date should rise to the top of the priority list right now. History has shown that even approaching the X Date can lead to market volatility, higher borrowing costs, and reduced confidence in US fiscal stability.”
Before returning to the White House in January, President Trump urged congressional Republicans to suspend the debt limit as part of a stopgap government funding package — but the provision wasn’t included.
House Republicans are currently compiling a much larger bill to boost border security, loosen energy regulations and provide a massive $4.5 trillion tax cut — while upping the nation’s debt limit by $4 trillion.
“The House is determined to send the president one big, beautiful bill that secures our border, keeps taxes low for families and job creators, grows our economy, restores American energy dominance, brings back peace through strength, and makes government more efficient and more accountable to the American people,” said House Speaker Mike Johnson (R-La.) and other Republicans in a Monday statement.
“The American people gave us a mandate and we must act on it. We encourage our Senate colleagues to take up the House budget resolution when they return to Washington,” added Johnson, House Republican leaders and GOP committee chairs.
Senate Majority Leader John Thune (R-SD) has favored a two-bill strategy — with immigration and energy initiatives in the first measure accompanied by a second bill focused on extending Trump’s 2017 tax cuts, which is projected to hike the deficit by between $3.5 trillion and $3.9 trillion over the next 10 years.
That’s likely to rankle fiscal hawks in the GOP, who have long opposed increases to eliminating America’s borrowing authority.
Former Speaker of the House Kevin McCarthy (R-Calif.) did exactly that back in June 2023 as part of the Fiscal Responsibility Act, which had suspended the debt limit until Jan. 1.
Democrats have traditionally favored suspending the debt ceiling — but it’s unlikely their party has an appetite for joining with Republicans should the action be taken as part of any party-line legislation.
In January, the Treasury Department increased its borrowing capacity by drawing on some of its funds — including pensions for federal employees — to push back the encroaching debt limit.
Newly appointed Treasury Secretary Scott Bessent told congressional leaders in a March 14 letter that he had extended that capacity until June 27.
