The Blubber

The U.S. government could face the risk of defaulting on some of its $36.6 trillion in debt as early as August—or potentially even by late May—unless Congress raises the nation’s debt ceiling, the non-partisan Congressional Budget Office (CBO) projected on Wednesday.

This estimate of the so-called “X-date,” when the Treasury Department would run out of funds to meet its obligations, follows a forecast earlier this week by the Bipartisan Policy Center, which warned that the U.S. could reach this critical point sometime between mid-July and early October.

The CBO stated the X-date would “probably” fall in August or September, but added that if the government’s borrowing needs exceed expectations, “the Treasury’s resources could be exhausted in late May or sometime in June.”

The agency emphasized the difficulty in pinpointing an exact X-date due to the unpredictable timing and size of revenue collections and federal spending. For example, a clearer picture of incoming revenue will emerge after the April 15 tax filing deadline. The CBO also cited the June 15 estimated tax payment deadline and additional extraordinary measures becoming available on June 30 as key dates.

Without an agreement between Congress and President Donald Trump to raise or suspend the debt ceiling, the consequences could be severe.

“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will be unable to pay all of its obligations. As a result, it would have to delay making payments for some activities, default on its debt obligations, or both,” the CBO warned.

Republican lawmakers, who currently hold majorities in both the House and Senate, have not indicated when they plan to move forward with legislation to raise the debt limit. In the past, Congress has frequently delayed such decisions until the last moment, creating uncertainty in financial markets and prompting credit rating agencies to downgrade the federal government’s credit standing.