Treasury Secretary Scott Bessent called on Congress to increase or suspend the debt ceiling in a letter to members of Congress, predicting it would be reached in August.
Bessent said that based on current calculations, there is a “reasonable probability” that the “federal government’s cash and extraordinary measures will be exhausted” by August. The announcement sets a de facto deadline of August for Congressional budget talks.
He urged Congress to raise or suspend the debt limit by mid-July to “protect the full faith and credit of the United States.”
“Prior episodes have shown that waiting until the last minute to suspend or increase the debt limit can have serious adverse consequences for financial markets, businesses, and the federal government, harm business and consumer confidence, and raise short-term borrowing costs for taxpayers,” Bessent said.
He pointed to a report from the Treasury Borrowing Advisory Committee in late April, which pointed to concerns including “increased volatility and costs, negative impacts on U.S. financial strength, and a heightened risk of a default.”
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“A failure to suspend or increase the debt limit would wreak havoc on our financial system and diminish America’s security and global leadership position,” Bessent concluded.
The United States came extraordinarily close to defaulting on its debt in December, passing a bill to temporarily resolve the matter hours before the deadline.