U.S. Treasury Warns Debt Limit Hit Expected August

Treasury Secretary Scott Bessent has warned congressional leaders that the U.S. government could run out of cash and extraordinary measures to meet its obligations as soon as August, during Congress's scheduled recess. In letters to House Speaker Mike Johnson and other leaders, Bessent urged Congress to raise or suspend the debt ceiling by mid-July to protect the full faith and credit of the United States. This deadline is critical as lawmakers are currently negotiating a massive legislative package that includes a $4 trillion to $5 trillion increase in the debt limit, along with funding for border security, defense, and tax cuts. Many Republican members who previously opposed raising the debt ceiling have pledged to support it this time to avoid Democratic leverage, since the debt limit increase is part of the broader budget package that can pass with a simple majority. Without timely action, the government risks an unprecedented default on its more than $36 trillion debt. Bessent emphasized that while the exact date cannot be precisely predicted, it is imperative to act before the summer recess to avoid severe financial consequences.