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3mo ago

Treasury Warns Congress of August Default Risk Without Debt Ceiling Action

Treasury Secretary Scott Bessent urges lawmakers to raise or suspend the debt limit by mid-July, as extraordinary measures are expected to run out during the August recess.

Treasury Secretary Scott Bessent testifies before the House Committee on Appropriations, Subcommittee on Financial Services and General Government, oversight hearing of the U.S. Department of the Treasury on Capitol Hill in Washington, Tuesday, May 6, 2025. (AP Photo/Jose Luis Magana)
Treasury Secretary Scott Bessent, from left, speaks as President Donald Trump and Commerce Secretary nominee Howard Lutnick listen as Trump prepares to sign an executive order in the Oval Office of the White House, Monday, Feb. 3, 2025, in Washington.
U.S. Treasury Secretary Scott Bessent testifies before a House Financial Services Committee hearing entitled "The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System," on Capitol Hill in Washington, D.C., U.S., May 7, 2025. REUTERS/Nathan Howard/File Photo
UNITED STATES - APRIL 4: The U.S. Capitol dome is lit as the Senate prepares to begin its vote-a-rama on the GOP's budget resolution on Friday evening, April 4, 2025. (Bill Clark/CQ Roll Call via AP Images)

Overview

  • Treasury Secretary Scott Bessent has formally requested Congress to address the debt ceiling by mid-July to avoid a potential default in August.
  • The Treasury has been using extraordinary measures since January to meet financial obligations after the U.S. hit its $36 trillion debt limit.
  • Bessent emphasized that waiting until the last minute to act could destabilize markets, harm consumer confidence, and increase borrowing costs.
  • House Republicans aim to include a debt ceiling increase in a sweeping budget reconciliation bill advancing President Trump’s agenda, but internal divisions have delayed progress.
  • A failure to address the debt ceiling could result in severe economic consequences, including a U.S. default and global financial instability.