The Congressional Budget Office (CBO) has issued a new warning regarding the US government's debt ceiling. If the debt ceiling is not raised, the government may face a funding shortage between mid-August and the end of September 2025, unable to meet its payment obligations, effectively resulting in a 'default.'

This latest forecast has pushed the so-called 'X date' (the date when government cash and unconventional financing methods will be exhausted) back by at least two weeks compared to the March estimate, allowing Congress more time to negotiate a debt-raising proposal in the 'One Big Beautiful Bill' that President Trump is advocating.

Since the debt ceiling was reinstated at the beginning of the year, the Treasury Department has been using special accounting measures to delay default risks. Treasury Secretary Scott Bessent recently warned Congress to pass a bill raising the debt ceiling to $36.1 trillion by mid-July to avoid a cash crisis in August.

The CBO stated in its monthly budget report, 'If the debt ceiling remains unchanged, the government's ability to borrow using unconventional measures may run out between mid-August and the end of September 2025.' The report also pointed out that fiscal revenues and expenditures over the past three months have been in line with expectations, reducing the risk of a cash shortfall occurring in early August.

Bessent has repeatedly emphasized, 'The US government will never default. The Treasury will not use any tricks; we will ensure the debt ceiling is raised.' However, he also acknowledged that if Congress cannot complete the legislative process by July 4, Republicans will have to negotiate with Democrats, giving Democrats important leverage in discussions. While Republicans generally support spending reforms related to the debt, some 'debt hawk' lawmakers adamantly oppose the unconditional raising of the debt limit and reject proposals to eliminate it. Trump previously indicated a desire to abolish debt limits but faces resistance within his party. Past standoffs over the debt ceiling have led to market turmoil, with investors typically selling short-term Treasury bonds that could be affected by default, avoiding bonds maturing around the 'X date,' which distorts the yield curve.