President Donald Trump and Congress have until August or September to reach agreement and act on the debt limit, the Congressional Budget Office forecast Wednesday.  (Stock photo/Getty Images Plus)

WASHINGTON — President Donald Trump and Congress have until August or September to reach agreement and act on the debt limit, the Congressional Budget Office forecast Wednesday.

Otherwise the United States would default for the first time in history, likely leading to a global financial crisis.

The nonpartisan CBO projection is similar to an estimate published earlier this week by the Bipartisan Policy Center think tank, which expects the X-date will occur between mid-July and early October.

The previous debt limit suspension expired in January, but the Treasury Department has been able to keep paying all the government’s bills through accounting maneuvers called extraordinary measures. When those run out, the country would hit the X-date and a default would begin.

The four-page CBO report says the default range “is uncertain” because how much money the federal government brings in as well as how much it spends at a given time is difficult to track. 

“If the government’s borrowing needs are significantly greater than CBO projects, the Treasury’s resources could be exhausted in late May or sometime in June, before tax payments due in mid-June are received or before additional extraordinary measures become available on June 30,” the report states. “Conversely, if borrowing needs fall short of the amounts in CBO’s projections, the extraordinary measures will permit the Treasury to continue financing government activities longer than expected.”

GOP bill on tap

Republicans in Congress are hoping to approve a massive bill in the months ahead that would extend the 2017 tax law, creating $4.5 trillion in new deficits. The package is also supposed to appropriate hundreds of billions of dollars to the Department of Defense and border security initiatives.

GOP lawmakers hope to pay for some of those increases in the deficit through spending cuts, but are far from agreement on how best to do that.

The debt limit allows the Treasury Department to borrow money to pay all of the country’s bills in full and on time. The federal government must borrow money to pay for spending that Congress has approved that isn’t funded by taxes or other fees.

During the last full fiscal year, that imbalance between revenue and spending, also called the deficit, totalled $1.8 trillion. Over decades, annual deficits have added up to a $36.2 trillion national debt.

Congress failing to raise or suspend the debt limit before the default date would limit the Treasury Department to spending only the cash it had on hand, a scenario with much broader implications than a partial government shutdown.

A default could lead the federal government to delay or simply never make payments on thousands of federal accounts, including Social Security, Medicare, Medicaid, troop pay, federal employee salaries and much more.

The Treasury Department writes on its website that not raising the debt limit by a specific dollar amount or suspending the debt limit through a future date “would have catastrophic economic consequences.”

A Government Accountability Office report lists off several negative repercussions of a default, including that it could trigger runs on banks and money market funds, that it would likely reduce lending to households and businesses, that it would lead to a substantial downgrade to the country’s sovereign credit rating and that it would likely lead to a significant and potentially long-lasting recession.

Treasury projection in May

Treasury Secretary Scott Bessent plans to send his department’s default date projection to Congress in May, though he wrote in a March letter that lawmakers should get to work sooner rather than later.

“The period of time that cash and extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts and the normal changes of forecasting the payments and receipts of the U.S. government months into the future,” Bessent wrote. “We expect to provide an update during the first half of May, after the majority of receipts from the April income tax filing season have been received.”

Bessent then urged lawmakers “to act promptly to protect the full faith and credit of the United States.”

Republican leaders in Congress and the Trump administration have just a few more months to decide how they want to handle this year’s debt limit debate.

House Republicans included a proposal in their budget resolution to raise the debt limit by $4 trillion later this year, when GOP lawmakers draft the bill to extend the 2017 tax cuts. But the Senate has yet to agree to that blueprint.

Republicans raising the debt limit through the complicated budget reconciliation process would require support from nearly every GOP lawmaker in Congress, since the party holds a paper-thin majority in the House and just 53 seats in the Senate.

Nearly two years ago, when Congress sent the last debt limit bill to the White House, 71 House Republicans and 31 GOP senators voted against approval.

The other option is for Republicans and Democrats to negotiate a bipartisan agreement on the debt limit that can get the support of at least 60 senators to move past the legislative filibuster.  

Assembly Speaker Robin Vos (R-Rochester) speaks at a WisPolitics event. Photo by Baylor Spears/Wisconsin Examiner.

Assembly Speaker Robin Vos (R-Rochester) criticized much of Gov. Tony Evers’ budget proposal on Tuesday, saying Republicans wouldn’t get behind the spending increases and taxation proposals. He said Republican lawmakers are starting the process of coming up with their own proposals, including for a broad tax cut plan.

Evers’ 2025-27 state budget proposal dedicates $4 billion to K-12 and higher education, cuts nearly $2 billion in taxes and raises income taxes for the state’s wealthiest residents. Evers said during a Wisconsin Counties Association conference on Tuesday that his proposal was “realistic” and that he hopes the Legislature will agree. 

Vos said the plan was unrealistic, however, because it would increase state spending by about 20% and included plans to raise taxes. He also complained Evers presented his plans without speaking with lawmakers first.

Wisconsin has an estimated budget surplus of about $4 billion. Democrats are seeking greater investments in the state’s public services while Republicans want to limit state spending. 

Vos told the audience at the WisPolitics event people are thinking about the budget surplus the wrong way.

“People believe we have this huge surplus, which is true on one-time money, but we have very little money for the government to be able to expand or increase funding for programs,” Vos said.

Wants broad tax cuts

Vos said the last state budget was “really disappointing” because Republicans met Evers’ goals by increasing spending on education, but Evers vetoed most of Republicans’ tax cut proposals. In the upcoming session, Republicans will seek to focus on using the budget surplus for cutting taxes. 

Evers proposed an array of tax cuts in his budget including eliminating taxes on cash tips, sales taxes on electricity and gas for Wisconsin homes and on over-the-counter medications. Vos compared tax cuts to “chocolate cake,” saying they are all good. However, he said his caucus will likely look at doing broader tax cuts and that he wants cuts that “people can actually feel.”

“My preference is something that is ongoing and meaningful to families,” Vos said. 

Vos said that lawmakers will work to pass a tax cut bill package before the end of the budget process. 

“Hopefully that’ll get signed, but if not, unfortunately, the budget will probably have to wait until we can find consensus on that tax cut,” Vos told reporters after the event.

Evers also proposed a new tax bracket with a marginal rate of 9.8% for the state’s wealthiest residents — those making above $1 million for single filers and married joint filers. The current top tax bracket has a 7.65% rate and applies to single filers making $315,310 and joint filers making $420,420.

Vos said Republicans would not support increasing taxes.

Continued no on Medicaid expansion (even postpartum)

Evers for his fourth budget in a row proposed that Wisconsin join the 40 other states in the country that have taken the federal Medicaid expansion, which ensures coverage for people making up to 138% of the federal poverty line. One difference in this budget cycle, however, is that the Trump administration and Republican lawmakers are seeking to cut Medicaid funding in order to help pay for tax cuts. The new reality, Vos said, appears to validate his ongoing opposition to accepting the federal Medicaid expansion.

“Thank goodness we never expanded Medicaid,” Vos said. 

Vos said he would prefer block grants from the federal government, and that it would be better for Wisconsin to get 90% of the money from the federal government without “strings attached” than to get 100% of the money and have to follow federal guidelines for how to spend it.

Vos was also critical of expanding postpartum Medicaid to cover new mothers for the first year after giving birth, casting doubt on a Republican-backed bill that supports Wisconsin joining the 48 other states that have done this. Currently, Wisconsin only covers up to 60 days after birth for eligible mothers. 

Evers included the extension in his budget proposal and a Republican-authored bill that would extend coverage has 23 Senate cosponsors and 67 Assembly cosponsors.

Despite the widespread bipartisan support for extending postpartum Medicaid, Vos said he was not the only person in his caucus who opposes expanding coverage. He said it doesn’t make sense to expand Medicaid coverage because those with incomes up to 100% of the federal poverty line can still keep coverage after the 60 days and those who could lose coverage could seek coverage through Obamacare.

“I am not the only person in the Legislature who is opposed to it. Many Republicans are opposed to expanding welfare, it’s just they are more than happy to let me stand in front of the arrows,” Vos said.

Calls language changes ‘dystopian’

Vos also critiqued changes to the state budget proposed by Evers that would update language to be gender neutral. 

The proposal would change certain words like “father” to “parent” and “husband” to “spouse.” Another section that is about artificial insemination would change “the husband of the mother” to “the spouse of the inseminated person.”

Republicans have locked on the latter phrase to claim that Evers is trying to erase mothers and fathers. 

Evers told reporters Monday that the changes were made to ensure with “legal certainty that moms are able to get the care they need,” noting that same sex couples could have been excluded from coverage under the old language. He accused Republicans of lying about the issue.

“I didn’t know that Republicans were against IVF, but apparently they are because that is what it’s about,” Evers said.

Vos said the change was “dystopian” and said the changes don’t fix any issue and Evers was just coming up with an explanation. He later told reporters that the language made the state a “national embarrassment.” 

Prison reform

Vos also complained about Evers’ process for coming up with a plan to reform the state’s prisons, saying he should have included lawmakers in developing it.

The proposed plan, which would cost over $500 million, would make wide changes to many of the state’s facilities including transitioning Lincoln Hills and Copper Lake youth correctional facilities into adult facilities, updating Waupun Correctional Institution, the state’s oldest prison, and eventually closing Green Bay Correctional Institution.

Vos said it’s known that lawmakers have had an interest in the issue and questioned why they weren’t consulted in developing the plan.

“He chose not to do that because he has one way of operating, which is his way or the highway. Those of us that have some interest in corrections reform will get together and come up with our own package and present it to the governor and say, ‘Here it is,’” Vos said.

DPI and Supreme Court elections

Vos also weighed in on Wisconsin’s upcoming spring elections. 

State Superintendent Jill Underly, the Democratic-backed candidate, is running for a second term in office against education consultant Brittany Kinser, the Republican-backed candidate. 

Vos said that Kinser is “the best candidate” because she supports school choice and appears willing to work with the Legislature. He added that he isn’t sure whether he has ever met with Underly. He also criticized Underly for changes to the evaluation of Wisconsin’s standardized test scores.

He described the recent February primary as “low profile” and said that with a “different electorate” at polls in April, Kinser likely has a chance to win. 

The higher profile spring election is for an open seat on the Wisconsin Supreme Court. The technically nonpartisan race pits Susan Crawford, the liberal candidate against  Waukesha County Judge Brad Schimel, the conservative candidate.

Vos said he thinks that the race will be about the candidates, but it is “possible” that the race could be a referendum on Trump. He noted that Democrats are seeking to turn out voters who  agree with them and billionaire Elon Musk and Trump are trying to bring out Republicans in the race. A group tied to Musk canceled a social media ad this week that featured a photo of the wrong Susan Crawford.

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