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.  

Gov. Tony Evers ordered the two audits into Milwaukee Public Schools in 2024. Evers meets children at a Dane County child care center in 2023. (Erik Gunn | Wisconsin Examiner)

An audit released Thursday found that Milwaukee Public Schools faces challenges due to declining enrollment, competitive school-choice dynamics, a teacher shortage and staff turnover as well as a “culture of fear” and resistance to change. The district needs to make systemic changes, the audit found, in order to adequately support its students, especially those who are the most vulnerable.

The operational audit was ordered by Gov. Tony Evers after news broke that the district has been excessively late in submitting required financial documents to the Department of Public Instruction. The crisis led to the resignation of Keith Posley as MPS superintendent and the state Department of Public Instruction withholding $16.6 million from the district.

The independent audit, conducted by MGT of America Consulting LLC, is the first of two ordered by Evers,  who formerly served as state superintendent and as a public school teacher. The second, ongoing audit is meant to examine the effectiveness of teaching and instruction in classrooms. 

“This audit is a critical next step for getting MPS back on track and, ultimately, improving outcomes for our kids,” Evers said in a statement. “I urge and expect the district to take these recommendations seriously and move forward quickly with implementing this audit’s findings.”

Evers allocated $5.5 million from federal American Rescue Plan funds for the audits and said there is a remaining $3 million that will go towards ensuring the district can start implementing the recommendations. 

Evers said that he will also propose allocating an additional $5 million in his 2025-27 budget to provide ongoing support to address audit results and implement audit recommendations, though he would need the Republican-led Legislature to allocate the money. The money would only be awarded to the district if the state thinks MPS has made substantial and sufficient progress implementing the audit recommendations. 

“MPS must make systemic changes to ensure that students — particularly the most vulnerable — are at the center of every decision,” auditors wrote. “Ultimately, this work is in service of students, whose future success hinges on a district capable of delivering equitable, high-quality education.”

The audit acknowledged that “proficiency rates sit at just 9% in math and 12% in reading, far below state and national averages, signaling a systemic failure to prioritize student outcomes.” 

The audit identified internal and external factors that have contributed to the challenges the district has faced. 

Internal factors included leadership instability, including a series of superintendents with short tenures and revolving leaders, a “culture of fear and reluctance to change,” high turnover and recruitment challenges, ineffective reporting protocols that have hindered accountability and financial mismanagement, lack of honesty, transparency and ineffective public communications that have contributed to a lack of public trust. 

External factors included stalled population growth and enrollment declines, “competitive school-choice dynamics,” national teacher and staff shortages, MPS students who face significant economic challenges and outdated facilities that have made it difficult to maintain healthy, safe and adequately equipped learning environments.

“These challenges, coupled with outdated facilities and a history of financial mismanagement, have eroded public trust and disproportionately affected the District’s most vulnerable students,” auditors wrote.

The audit laid out goals that the district should prioritize that include creating a “coherent central system,” “fostering meaningful communication and collaboration across departments within the District” and operating and funding strategically by investing in strategies and systems that prepare the District for financial sustainability, operational efficiency and long-term success. 

Some of the specific recommendations include hiring a chief communications officer and chief operations officer, restructuring the central office to clarify roles, investing in the Office of Human Resources, redesigning employee reporting processes, investing in training for the Department of Research, Assessment and Data, continuing to use support offered by DPI and improving collaboration between the MPS Board of Directors and district leadership.

MPS said in a press release that the audit “validates the progress we are making while also serving as a guide for continued improvements.”

“It highlights the strength of our existing systems and the dedication behind key initiatives, reinforcing the steps we have taken to move our students forward. At the same time, it identifies areas for growth, reaffirming our commitment to continuous improvement,” MPS stated. “While acknowledging the need for focused support, the report makes clear that we have an opportunity to build on this momentum, strengthening our schools and communities while creating a more unified path forward.”

DPI Superintendent Jill Underly said in a statement that the audit “offers a clear and practical blueprint for getting the district back on course, ensuring it better serves students and families.” 

Underly said she was optimistic that the district would turn the recommendations into “meaningful change” with the leadership of Brenda Cassellius, who was selected this week by the Board to be the new MPS superintendent and previously served as superintendent of Boston Public Schools and commissioner of education in Minnesota.

“This report also underscores the importance of the DPI’s ongoing efforts to support MPS in financial reporting, including the development of a Corrective Action Plan. These efforts are both realistic and essential for helping the district regain compliance and thrive,” Underly said.