US Treasury Could Default As Soon As August, CBO Warns

ZeroHedge, Mar 26, 2025 – Excerpt:

Earlier this week we pointed out the striking plunge in the Treasury’s cash balance which had averaged around $800 billion for the past 18 months, and which plunged by $480 billion in the past month.

Treasury cash down $480 billion in the past month. pic.twitter.com/uV4GDNGheO

— zerohedge (@zerohedge) March 25, 2025

Regular readers are aware of the reason for this plunge: ever since the US hit the debt ceiling in the last days of the Biden administration, the US Treasury has been unable to issue new debt and so has been forced to draw down its cash to fund day to day operations.

Obviously, there is a limit to how much longer this can continue: after all, once the cash balance hits 0, the Treasury will have to start prioritizing payments, and eventually, it may even have to delay payments of interest or repayments of principal… better known as default.

Which brings us to the latest report from the Congressional Budget Office published this morning which warned that the federal government could run out of enough money to pay all of its bills on time as soon as August if lawmakers fail to raise or suspend the debt limit, to wit:

The Congressional Budget Office estimates that if the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures will probably be exhausted in August or September 2025. The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from CBO’s projections. (source)

On Monday, the Bipartisan Policy Center said that according to public data the Treasury will be forced to start defaulting on obligations sometime between mid-July and early October.

The CBO also cautioned that if the government’s borrowing needs are “significantly greater than CBO projects, the Treasury’s resources could be exhausted in late May or sometime in June, before tax payments due in mid-June are received or before additional extraordinary measures become available on June 30.”

The date is uncertain because of the unpredictable nature of tax receipts, and Rep. Jason Smith of Missouri, chair of the House Ways and Means Committee, said earlier this month that it could come as early as mid-May.

Henrietta Treyz, director of economic policy at Veda Partners, wrote in a Monday note to clients that an earlier “x date” would be beneficial to House Republicans and those rooting for the Trump tax plan to be initiated in a single piece of legislation as soon as possible.

The Treasury Department has been using special accounting maneuvers since Jan. 21 to avoid breaching the $36.1 trillion debt ceiling, which kicked in at the start of the year. But the department has yet to offer specific guidance on when those measures will be exhausted.

Full article: https://www.zerohedge.com/economics/cbo-warns-us-treasury-could-default-soon-august

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The Federal Debt currently stands at $36.608 trillion, with continuing deficits hitting new records. Household Debt has reached $18.04 trillion. State and Local debt has breached the $2.122 trillion level.

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US deficit sets record with $1.1 trillion in first five months of fiscal year 2025

The new numbers, released Wednesday, showed the deficit between October 2024, and February 2025. The deficit for February alone was $307 billion.

By Misty Severi | JustTheNews.com | Published: March 12, 2025

The United States’ deficit increased by a record-breaking $1.1 trillion during the first five months of the current fiscal year, new data from the Treasury Department showed.

The new numbers, released Wednesday, showed the deficit between October 2024 and February 2025. The unadjusted increase saw a surge of $1.147 trillion, while the deficit for the same period in fiscal year 2024 was $828 billion. The deficit for February alone was $307 billion. 

The deficit is largely driven by spending on interest, military programs, public benefits and security, according to the financial news outlet Barron’s. The largest spending costs came from interest paid on the public debt and higher tax credits.

A Treasury department spokesperson told CNBC that there has been limited impact from Elon Musk’s Department of Government Efficiency, which is attempting to reduce wasteful government spending. But the department’s operations have only been active for one month. 

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Meanwhile… Household Debt Hits $18.04 Trillion; Auto and Credit Card Delinquency Transition Rates Remain Elevated – NY Fed:

Total household debt increased by $93 billion to reach $18.04 trillion in the fourth quarter, according to the latest Quarterly Report on Household Debt and Credit. Aggregate delinquency rates ticked up 0.1 percentage point (ppt) from the previous quarter to 3.6 percent of outstanding debt in some stage of delinquency. Mortgage balances rose by $11 billion to stand at $12.61 trillion at the end of December. Transition into serious delinquency, defined as 90 or more days past due, remained stable for mortgages, but edged up for auto loans, credit cards, and HELOC balances. Auto loan balances saw an $11 billion increase to $1.66 trillion in the fourth quarter, while credit card balances increased by $45 billion from the previous quarter to reach $1.21 trillion at the end of December.

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The Leviticus 25 plan is the one and only economically viable, politically feasible plan currently ‘on the table’ to reverse America’s colossal (and growing) debt dilemma – and get the U.S. back on solid financial ground.

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