The United States is expected to run out of borrowing authority by August, Treasury Secretary Scott Bessent said congressional leaders on Friday.
In a letter dated May 9, he urged them to avoid economic disaster by extending the debt ceiling by July, before Congress departs for its yearly August recess.
There is “significant uncertainty” regarding the precise date, according to Bessent.
“However, after receiving receipts for the recent April tax filing season, there is a reasonable probability that the federal government’s cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess,” Bessent stated. “Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July, before its scheduled break, to protect the full faith and credit of the United States.”
As part of their broad party-line package to enact President Donald Trump’s agenda, Republicans, who control both the House and the Senate, intend to increase the debt ceiling by $4 trillion or $5 trillion.
With their slim majorities, the party is finding it difficult to agree on many aspects of that legislation, so that’s a difficult task. There is no guarantee that a measure will be passed before August.
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In order to avert an economic crisis that would probably follow a default on U.S. debt, they could need to address the debt ceiling problem separately and rely on Democratic cooperation if they are unable to do so within that time frame.
“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 stated in the letter.
