U.S. Debt Default “X-Date” Nearing? CBO Warns Government May Exhaust Funds by Mid-August

The U.S. Congressional Budget Office (CBO) stated on Monday that the federal government could run out of funds to meet its debt obligations between mid-August and the end of September, marking the potential arrival of the so-called debt default "X-Date."

In its monthly budget review, the CBO wrote: “The Congressional Budget Office now estimates that if the debt ceiling remains unchanged, the Treasury’s borrowing capacity using extraordinary measures will likely be exhausted sometime between mid-August and the end of September 2025.”

The agency further noted that revenue and expenditure data over the past three months aligned with expectations, reducing the likelihood that these measures would be depleted by early August.

This revised estimate pushes the projected “X-Date” back by approximately two weeks compared to the CBO’s March forecast, potentially allowing Congress more time to reach an agreement on raising the federal debt ceiling—an element tied to President Trump’s tax reduction proposal.

The debt ceiling was reinstated earlier this year, prompting the Treasury to employ “extraordinary measures” to avoid a federal default. On June 3, 2023, then-President Biden signed legislation suspending the ceiling until early 2025, temporarily averting a default scenario.

The debt ceiling represents the maximum borrowing limit set by Congress for the federal government to meet its fiscal obligations—effectively the limit on the government's “credit card.” It was originally intended to enforce fiscal discipline and limit deficits. However, due to ongoing budget shortfalls, raising the ceiling has become routine to maintain government operations.

Since its establishment in 1939 at $45 billion, the debt limit has been raised 103 times.“

Extraordinary measures” refer to temporary accounting techniques used by the Treasury to continue operations when the debt ceiling is reached but not yet adjusted by Congress.

If these measures are exhausted and Congress fails to act, the Treasury will be unable to fulfill its obligations, resulting in a default—referred to as the “X-Date.”

The debt ceiling remains a significant challenge for President Trump. His proposed “Big and Beautiful” bill includes provisions to raise the debt ceiling by $4 trillion from the current $36 trillion level, enabling further borrowing. This bill is currently under Senate review. According to CBO projections, the legislation would increase the federal deficit by $2.4 trillion.

Last week, Trump suggested eliminating the debt ceiling entirely. On his social platform Truth Social, he stated: “The debt ceiling should be eliminated entirely to prevent economic catastrophe. It is too destructive and should not be controlled by politicians who want to use it as leverage. It could have a terrible impact on our country, and even indirectly on the world.”