CBO: U.S. May Run Out of Cash by August, Debt Limit Talks Urged/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The Congressional Budget Office (CBO) says the U.S. could run out of money to pay its bills by August without a new debt ceiling agreement. The government has already hit its $36.1 trillion borrowing limit and is relying on temporary measures. Without Congressional action, the U.S. risks defaulting on its obligations.
U.S. Debt Ceiling Deadline: Quick Looks
- Projected X-Date: August to September 2025
- Current Limit: $36.1 trillion
- Extraordinary Measures: Already in use since January
- Risk: Default unless Congress raises or suspends the limit
CBO: U.S. May Run Out of Cash by August, Debt Limit Talks Urged
Deep Look:
WASHINGTON (AP) — The United States is on course to exhaust its financial lifeline as soon as August, risking a potential default unless lawmakers reach a new debt ceiling agreement, according to a Congressional Budget Office (CBO) report released Wednesday.
The report warns that “extraordinary measures”—temporary emergency actions that allow the U.S. Treasury to continue paying bills after reaching the statutory debt limit—will likely run out within the next five to six months. These measures were triggered after the debt ceiling was reinstated on January 2, following a temporary suspension under 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,” the report stated.
What Happens Without a Deal?
If Congress fails to act to raise or suspend the debt ceiling, the government would default on its obligations for the first time in U.S. history—jeopardizing payments for Social Security, military salaries, and interest on the national debt.
A separate analysis by the Bipartisan Policy Center, released earlier this week, estimated that the U.S. could face a cash shortfall as soon as mid-July.
Trump Administration’s Position
President Donald Trump has previously tied any debt ceiling measure to broader budget negotiations, warning that failing to do so would be “a betrayal of our country.” Despite his demands, the most recent government funding deal did not address the borrowing cap.
With Trump’s Republican allies in Congress traditionally resistant to raising the debt ceiling, the issue could soon ignite a high-stakes showdown between the White House and lawmakers.
Treasury’s Extraordinary Measures
Before stepping down, former Treasury Secretary Janet Yellen initiated the use of extraordinary measures—pausing investments into certain federal worker pension and disability accounts to free up cash.
Her successor, Treasury Secretary Scott Bessent, has continued these actions while providing ongoing updates to Congress. However, the CBO warns that time is running out.
“The government’s ability to borrow using extraordinary measures will probably be exhausted in August or September 2025,” the report notes.
“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.”
What’s at Stake?
If no action is taken:
- Federal agencies could face shutdowns
- Social Security payments could be delayed
- Credit markets may destabilize, increasing borrowing costs
- Global confidence in U.S. financial stability could erode
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