US could default on debt as soon as July: Analysis

(The Hill) - The federal government could default on its debt as soon as July, a new forecast from the Bipartisan Policy Center warns, raising pressure on Congress for action. 

The prominent think tank forecasted on Monday that the so-called “X-Date” would likely arrive between mid-July and early October.

“Fiscal responsibility is not just about avoiding financial calamity time and time again—it’s about ensuring economic stability and paying our bills on time,” Margaret Spellings, president and CEO of the think tank, said in a statement. 

“This year presents many opportunities to begin getting our fiscal house in order without risking the full faith and credit of the United States. Policymakers must commit to responsible budgeting, which starts with avoiding debt limit brinksmanship and its impacts on our economy.”

While it’s difficult to pinpoint a hard X-Date, projections become more precise the closer the government arrives to running out of cash. The think tank said on Monday that tax revenues will also be a key factor in the timeline.

The debt limit was last suspended by Congress as part of a bipartisan bill struck between former President Biden and GOP leadership in 2023, staving off the threat of national default through early 2025.

However, Treasury Secretary Janet Yellen said in January that the government would have to implement “extraordinary measures” after the government was expected to reach the new limit later that month.

The debt caps how much money the Treasury can owe to pay the country’s bills.

President Trump had pushed the last Congress to pass legislation to address the debt ceiling in December, as Republicans have warned Democrats could use the leverage point to demand major concessions.

When Republicans led the House in the last Congress, they also used the debt ceiling to get a Democratic-led Senate and Democratic president to come to the negotiating table for a budget caps deal.

Republicans have ambitious hopes of using a special maneuver known as budget reconciliation to handle the debt ceiling, along with extending Trump’s signature tax cuts set to expire this year, without Democratic support. 

But the debt ceiling timeline could complicate those plans, particularly as some Republicans warn the agenda could face delays because of internal GOP divisions.