US government could face default risk as soon as July, analyst projects

Richard Cowan

Mon, Mar 24, 2025, 9:37 AM 2 min read

By Richard Cowan

WASHINGTON (Reuters) - The U.S. authorities volition hazard defaulting connected immoderate of its $36.6 trillion successful indebtedness sometime betwixt mid-July and aboriginal October unless Congress acts to rise the headdress connected Washington's borrowing limit, the Bipartisan Policy Center deliberation vessel projected connected Monday.

Lawmakers person repeatedly taken negotiations implicit raising the government's borrowing bounds to the past minute, a inclination that has rattled fiscal markets and led the large recognition agencies to little their ratings connected the national government's creditworthiness.

The brinkmanship has continued contempt the information that Congress's ain decisions, some to authorize caller spending and to chopped taxes, person pushed the nationalist indebtedness higher.

The non-partisan Congressional Budget Office connected Wednesday volition marque its ain projection for the alleged X-date, erstwhile the Treasury Department is nary longer capable to screen each of its obligations, according to a spokesperson.

"Lawmakers cannot spend to hold enactment connected the indebtedness limit," Shai Akabas, vice president of economical argumentation astatine BPC said successful a statement. “Addressing indebtedness bounds good up of the X Date should emergence to the apical of the precedence list."

The U.S. has ne'er defaulted connected its indebtedness and planetary fiscal markets go jittery if determination is adjacent a whiff of that perchance occurring.

A 2023 indebtedness ceiling showdown pushed the U.S. to the brink of default and wounded its recognition rating.

It is hard to nail down a precise X-date due to the fact that it depends upon respective factors, including the travel of taxation receipts with the mid-April deadline for Americans to record their yearly taxation returns.

This year, respective different factors volition play into the deadline, including signs of a softening system and the imposition of U.S. tariffs connected overseas goods by President Donald Trump.

Also, taxation filing extensions to assistance victims of caller earthy disasters are besides playing into the travel of revenues into authorities coffers.

BPC noted that portion unlikely, determination is the imaginable for an aboriginal June X-date if taxation collections lag down estimates up of quarterly receipts connected June 15.

(Reporting by Richard Cowan; Editing by Scott Malone and Alistair Bell)