US could run short of money to pay its bills by August without a debt limit deal, CBO says

WASHINGTON — The United States is on track to hit its statutory debt ceiling — the so-called X-date when the country runs short of money to pay its bills— as early as August without a deal between lawmakers and the White House, according to a Congressional Budget Office report Wednesday.

By that time, the government would no longer have enough of a financial cushion to pay all its bills after exhausting its ‘’extraordinary measures’’ the accounting maneuvers used to stretch existing funds.

Washington would risk defaulting on its debt unless Congress and Republican President Donald Trump agree to lift the borrowing limit or abolish the debt ceiling concept altogether.

The debt limit was reinstated Jan. 2, following its suspension by Congress in the Fiscal Responsibility Act of 2023.

‘‘The Treasury has already reached the current debt limit of $36.1 trillion, so it has no room to borrow under its standard operating procedures,‘’ according to the CBO report.

An analysis released on Monday by the Bipartisan Policy Center estimates that the U.S. could run out of cash by mid-July if Congress did not raise or suspend the nation’s debt limit.

Trump had previously demanded that a provision raising or suspending the debt limit — something that his own party routinely resists — be included in legislation to avert the last potential government shutdown. ‘’Anything else is a betrayal of our country,‘’ Trump said in a statement in December. That deal did not address the debt limit.

Experts say an extended default period could result in the loss of millions of jobs and an economic. Government payments to millions of families probably would go unpaid, including to Social Security beneficiaries, veterans and military families. There could be disruptions to operations such as air traffic control and food safety.

Given these consequences, Congress and presidents have always found a way, even at the last minute, to avoid a default.

The nation has been through several protracted debt ceiling fights between congressional Democrats and Republicans, including in 2011 and in 2023 when lawmakers suspended the debt limit through Jan. 1, 2025, rather than raising the ceiling by a dollar amount.

After the debt limit was reinstated in January, in one of her last acts as Treasury Secretary, Janet Yellen said Treasury would institute ‘’extraordinary measures " intended to prevent the U.S. from reaching the debt ceiling.

Since then, the Treasury Department has stopped paying into certain accounts, including a slew of federal worker pension and disability funds, to make up for the shortfall in money. Treasury Secretary Scott Bessent has continued to notify Congress about the use of extraordinary measures in an effort to prevent a breach of the debt ceiling.

The CBO estimates that if the debt limit remains unchanged, then ‘’the government’s ability to borrow using extraordinary measures will probably be exhausted in August or September 2025. The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from CBO’s projections.‘’

The House added a $4 trillion increase in the debt ceiling as part of a Republican budget plan that sets the stage for extending the individual tax cuts passed in Trump’s first term.

But the Senate will have to agree to that increase, and it’s unclear at this point whether the Republican-led chamber will do so. GOP leadership in both the House and Senate continue to negotiate on a path forward, with the latest meeting Tuesday at the White House.

Democrats say they are willing to work with Republicans on a debt ceiling increase, but not as a pretext to deliver tax cuts that they say will most help the wealthiest Americans at the expense of those who rely on important safety net programs.

‘‘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,‘’ said Pennsylvania Rep. Brendan Boyle, the ranking Democrat on the House Budget Committee.