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Washington, D.C. — U.S. Treasury Secretary Scott Bessent has issued a strong call to action for Congress, warning that lawmakers must raise or suspend the federal debt ceiling by mid-July to avoid a potentially catastrophic default.

In a formal letter to House Speaker Mike Johnson, Bessent emphasized the urgency:

“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.”

You can read more from AP News.

The Treasury has been relying on “extraordinary measures” to keep the government functioning since January, after hitting the current statutory borrowing cap of $36.1 trillion. These steps have included suspending investments in federal retirement and disability funds, among other tactics to maintain cash flow.

However, Bessent warned that these options are running out. According to the latest projections, the U.S. could run out of money to pay its bills—the so-called “X-date”—sometime in August. That date could clash with Congress’s summer recess, adding further urgency to legislative action.

More analysis is available from Axios.

Adding weight to the warning, the Bipartisan Policy Center has projected a similar timeline. Without action, they estimate that the Treasury could run out of cash by mid-July. This would leave the federal government without the ability to meet its obligations, including paying military salaries, Social Security benefits, and servicing debt interest.

Explore the full estimate from the Bipartisan Policy Center.

In response, Republican lawmakers are drafting a legislative package that proposes $4 trillion in new borrowing authority, coupled with tax reductions and increased spending on defense and border security. The plan is to use the budget reconciliation process to pass it by July 4, avoiding a Senate filibuster.

Details on this legislative plan were also reported by Reuters.

Debt ceiling battles have long been a source of economic risk. In 2011, a similar standoff led to a historic downgrade of the U.S. credit rating. Markets reacted with sharp volatility and investor confidence was shaken. Today, economists warn that a failure to lift the ceiling in time could lead to:

• Increased borrowing costs
• Stock market instability
• Global financial uncertainty
• A potential recession

These risks were highlighted in recent coverage by The Wall Street Journal.

Secretary Bessent stressed that protecting the “full faith and credit of the United States” is a bipartisan responsibility. As deadlines approach, the pressure mounts on lawmakers to prevent a fiscal crisis that could deeply impact households, markets, and America’s global reputation.