U.S. Treasury Secretary Scott Bessent has warned congressional leaders that the federal government could exhaust its borrowing authority by August, urging lawmakers to take action before the annual recess. In a letter dated May 9, Bessent highlighted the risks of inaction, stating that failing to address the debt ceiling in time could lead to severe financial and economic consequences.
Bessent has called on Congress to increase or suspend the debt limit by mid-July, noting that the exact date of default remains uncertain but increasingly likely as the government’s ability to manage funds becomes limited. He emphasized the importance of acting before Congress leaves for its scheduled break.
“There is a reasonable probability that the federal government’s cash and extraordinary measures will be exhausted in August,” Bessent wrote, citing recent receipts from the April tax filing season. He warned that a default would severely damage the United States’ financial system, reputation, and global leadership position.
Republican lawmakers, who currently hold the majority in both chambers, are pushing for a substantial debt limit increase—between $4 trillion and $5 trillion—as part of a broader legislative agenda. However, internal divisions within the party could hinder timely passage, potentially forcing a separate deal that may require Democratic support.
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According to NBC News, Bessent explicitly urged Congress to act by mid-July, stressing the dangers of recessing without resolving the issue. He stated, “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.”
As reported by Reuters, the Treasury has already crossed the $36.1 trillion limit set earlier this year, with the current debt standing at $36.2 trillion. Temporary financial maneuvers are in play to delay default, but Bessent warned they won’t last much longer. Republicans are working to finalize their plan by July 4, but given prior trends, the risk of last-minute negotiations remains high—something that has historically unsettled global markets and impacted the U.S. credit rating.
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