Congress needs to address debt ceiling before its August recess to prevent default, Treasury secretary says

Lawmakers have until August to address the debt ceiling or the US could default on its obligations for the first time ever, Treasury Secretary Scott Bessent wrote to congressional leaders Friday, urging them to act even sooner, “to protect the full faith and credit of the United States.”

Lawmakers have until August to address the debt ceiling or the US could default on its obligations for the first time ever, Treasury Secretary Scott Bessent wrote to congressional leaders Friday, urging them to act even sooner, “to protect the full faith and credit of the United States.” The projection gives Republican lawmakers – who control Capitol Hill – a firmer deadline of when they have to pass their massive budget reconciliation bill, which aims to increase the debt ceiling along with extending the 2017 tax cuts and slashing federal spending. In his letter, Bessent said there is a “reasonable probability” that the cash and extraordinary measures that are allowing Treasury to continue paying the nation’s bills in full and on time will be exhausted in August, pointing out that is when Congress is scheduled to be in recess. But he noted that the projection is subject to “significant uncertainty.” “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,” he wrote. Treasury has been using cash and extraordinary measures to pay the nation’s bills in full and on time since January 21, when the US hit its roughly $36 trillion debt ceiling. Once the nation reaches that cap, which it has done repeatedly, it can no longer borrow to cover its obligations in full and on time. A default would likely cause global economic upheaval. House GOP leaders are closely monitoring projections for the so-called X-date, when the government could default, House Speaker Mike Johnson said at an Axios event in late April.