CBO Says Debt Limit Change Probably Needed by August or September

The Congressional Budget Office (CBO) said Wednesday (March 26) that if the debt limit is not raised or suspended, the government’s ability to borrow will probably be exhausted in August or September.

The exhaustion date could vary depending on the government’s revenue collections and outlays over the coming months, the CBO said in an analysis released Wednesday.

If the government’s borrowing needs are greater than the CBO’s projection, the Treasury’s resources could be exhausted in late May or June. If they are less than the CBO’s forecast, the Treasury could continue financing government activities beyond September, according to the analysis.

“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will be unable to pay all of its obligations,” the CBO said in its analysis. “As a result, it would have to delay making payments for some activities, default on its debt obligations, or both.”

The current debt limit, or debt ceiling, kicked in at the beginning of the year, Bloomberg reported Wednesday.

The Treasury Department has been using special account maneuvers to avoid breaching the limit but has not said how long those measures can be used, according to the report.

Treasury Secretary Scott Bessent, who took that role in January, said during his confirmation hearing that while he is in the job, the country “is not going to default on its debt,” per the report.

The House passed a budget proposal in February that would raise the debt ceiling by $4 trillion, but it is not clear if the Senate will add and pass a similar measure, the report said.

Shortly after Bessent became secretary of the Treasury, it was reported that he would be tasked with addressing the federal debt limit, working with Republicans in Congress to make the tax cuts from President Donald J. Trump’s first administration permanent.

Past negotiations in Congress over raising the debt ceiling have often continued to the last minute, Reuters reported Wednesday.

Those debates have shaken financial markets and led credit agencies to lower their ratings on the federal government’s creditworthiness, the report said.