The U.S. Capitol in Washington, D.C., is pictured on Monday, April 15, 2024.  (Photo by Jennifer Shutt/States Newsroom)

The United States could default between Aug. 15 and Oct. 3 if Congress doesn’t act to raise or suspend the debt limit before then, according to a projection the Bipartisan Policy Center published Wednesday.

The new estimate from the centrist Washington, D.C., think tank would give Congress slightly more time to address the issue than the center’s last analysis that projected the so-called X-date could hit as early as July.

Quarterly taxes received in April were higher than expected, while the economy has remained stable, which combined to help push the date later, the center said in a Wednesday news release.

The projection aligns with the nonpartisan Congressional Budget Office estimate this month that the X-date would come between mid-August and the end of September. 

The Bipartisan Policy Center analysis does not change the recommendation from the center, Treasury Secretary Scott Bessent and others that Congress deal with the debt limit sooner rather than later.

“Congress must address the debt limit ahead of the August recess,” Margaret Spellings, president and CEO of the center, said in the Wednesday release. “Congress can’t afford to inject any additional uncertainty into the mix. They need to act soon to prioritize our nation’s financial stability and reassure global markets that we take this responsibility seriously.”

Both the House and Senate are scheduled to be in recess Aug. 4 through Sept. 2.

Global crisis looms

If Congress does not act, the U.S. would default on its debt for the first time, likely leading to a global financial crisis.

As of June 18, the federal treasury had $384 billion in cash on hand and could save another $89 billion through “extraordinary measures,” the term for accounting tricks the government can use to save cash in an emergency.

The exact date will depend on how much the government spends in July and August — months that typically see large deficits, according to the Bipartisan Policy Center.

If the government can avoid the debt limit until quarterly taxes are due on Sept. 15, those receipts would likely give more breathing room until early October, the center said.

Other factors that could influence the X-date include fluctuating tariff revenue and the potential for costly hurricanes this summer.

Big beautiful debt limit increase

The reconciliation package Republicans in Congress are racing to send to President Donald Trump’s desk by July Fourth includes a raise in the debt limit. The version that passed the House would raise the debt ceiling by $4 trillion, while the Senate version would increase it by $5 trillion.

Republican senators are scrambling this week to revamp several pieces of the legislative package as the chamber’s parliamentarian rules that some do not meet the strict rules for what can be considered under the fast-track procedure known as budget reconciliation.

The process allows the Senate to pass the bill with a simple majority, meaning Republicans could pass it without Democratic votes. But Republicans are still haggling among themselves over provisions to aid rural hospitals amid changes to Medicaid, sell off public lands and others.

Once passed in the Senate, either the House would have to approve that version or both chambers would have to vote on some kind of compromise language before Trump could sign the bill.

Treasury Secretary Scott Bessent prepares to testify before the Senate Finance Committee during his confirmation hearing  in the Dirksen Senate Office Building on Capitol Hill on Jan. 16, 2025, in Washington, D.C.  (Photo by Chip Somodevilla/Getty Images)

WASHINGTON — The Treasury Department announced Friday that Congress must address the debt limit before August, setting a firm deadline for Republicans to wrap up work on the “big, beautiful bill” that will raise the nation’s borrowing limit by up to $5 trillion.

Treasury Secretary Scott Bessent wrote in a letter to congressional leaders that “there is a reasonable probability that the federal government’s cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess.

“Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July, before its scheduled break, to protect the full faith and credit of the United States.”

The projection marks the first time the Trump administration has weighed in publicly on when the government will likely reach default since the last suspension expired in January. 

In the months since then, the Treasury Department has used accounting maneuvers known as extraordinary measures to pay all of the country’s bills in full and on time.

Treasury’s projection is similar to a report the nonpartisan Congressional Budget Office released in March predicting the country would reach default in August or September unless Congress acted before then.

Reconciliation package

Republicans are hoping to lift the debt limit without having to negotiate a bipartisan agreement with Democrats, which is typically how lawmakers have addressed the debt limit during the past couple decades.

GOP leaders plan to raise the debt limit by between $4 trillion and $5 trillion in the 11-bill reconciliation package they’re using to address tax law, overhaul higher education aid and cut federal spending.

Speaker Mike Johnson, R-La., expects his chamber will vote on that legislation before the end of May, though Senate leaders haven’t put a timeline on when they’d bring the bill to the floor in that chamber.

GOP senators are likely to propose several amendments to the package, and any changes by the Senate would require the bill to get a final sign-off in the House before it could head to President Donald Trump’s desk.

The Treasury Department’s projection that a debt limit default will likely take place if no action is taken before August puts a firm deadline on when Republicans will need to reach final agreement.

Caution against waiting

Bessent also cautioned lawmakers against waiting until the last minute to get their work done.

“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 businesses and consumer confidence, and raise short-term borrowing costs for taxpayers,” he wrote. “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.”

A default on the country’s debt would limit the federal government to spending only the money it has on hand, likely leading to delayed, incomplete, or nonexistent payments on thousands of programs, including Social Security, Medicare, Medicaid, troop pay, veterans benefits and nutrition programs, among many others.

It would also lead to a downturn in the global economy with a recession being among the better scenarios.

A default is vastly different from a partial government shutdown and would lead to more significant consequences for federal spending and the economy.