Fact Check: The U.S. debt ceiling must be raised to avoid default on government obligations.
What We Know
The U.S. debt ceiling is the maximum amount of debt that the Department of the Treasury can issue to finance government operations. As of January 2, 2025, the debt ceiling was reinstated at $36.1 trillion after being suspended until that date (CBO). The Congressional Budget Office (CBO) estimates that if the debt limit remains unchanged, the government's ability to borrow using "extraordinary measures" will likely be exhausted by August or September 2025 (CBO). If the debt limit is not raised or suspended before these extraordinary measures are exhausted, the government will be unable to fulfill all its obligations, potentially leading to delayed payments or default on its debt obligations (CBO, CBO).
Analysis
The claim that the U.S. debt ceiling must be raised to avoid default is supported by multiple credible sources. The CBO's projections indicate a clear timeline, suggesting that without an increase in the debt ceiling, the government could run out of borrowing capacity as early as late May 2025 (Reuters). This aligns with the understanding that the debt ceiling is a legal limit on the amount of money the government can borrow to pay its existing obligations.
The Treasury Department has also stated that failing to raise the debt limit would have "catastrophic economic consequences," including the risk of default (Treasury). Furthermore, the Congressional Research Service (CRS) emphasizes that the debt ceiling has been raised or suspended multiple times in the past to accommodate the government's borrowing needs, indicating a historical precedent for such actions (CRS).
The reliability of these sources is high. The CBO and the Treasury are both authoritative government entities that provide nonpartisan analysis and information. The CRS is a nonpartisan research arm of Congress, which adds to the credibility of the information provided (CRS).
Conclusion
The claim that the U.S. debt ceiling must be raised to avoid default on government obligations is True. The evidence clearly indicates that without an increase or suspension of the debt ceiling, the government will face an inability to meet its financial obligations, leading to potential default. The projections from the CBO and statements from the Treasury substantiate this claim.
