Fact Check: "The U.S. government can face a default on its debt without action on the debt ceiling."
What We Know
The U.S. government operates under a statutory limit known as the debt ceiling, which restricts how much debt the Treasury can issue. This limit was suspended on June 3, 2023, and reinstated on January 2, 2025, at $36.1 trillion, the amount of debt outstanding at that time (CBO). The Congressional Budget Office (CBO) has projected that if the debt limit remains unchanged, the government's ability to borrow using established "extraordinary measures" will likely be exhausted by August or September 2025 (CBO).
Extraordinary measures are temporary actions the Treasury can take to create additional borrowing capacity without breaching the debt ceiling. These include suspending investments in certain federal retirement funds and reducing cash balances (Debt Ceiling Explainer). If these measures are exhausted without an increase or suspension of the debt limit, the government would be unable to meet all of its obligations, leading to potential defaults on debt obligations (CBO, Debt Ceiling Explainer).
Analysis
The claim that the U.S. government can face a default on its debt without action on the debt ceiling is substantiated by the current understanding of the debt ceiling and the mechanisms in place to manage it. The CBO's projections indicate a clear timeline for when extraordinary measures will run out, which could lead to a default if Congress does not act (CBO).
The sources used in this analysis are credible and authoritative. The CBO is a nonpartisan agency that provides economic data and analysis to Congress, making its reports reliable for understanding fiscal matters. The Debt Ceiling Explainer from the House Democrats provides context on the historical and legislative background of the debt ceiling, further supporting the claim that failure to act could lead to default (Debt Ceiling Explainer).
However, it is important to note that the exact timing of a potential default is uncertain and depends on various factors, including government revenue and spending patterns. The CBO has indicated that if borrowing needs exceed their projections, the Treasury could run out of resources even earlier than anticipated (CBO).
Overall, the evidence indicates that without action on the debt ceiling, the government could indeed face a default on its debt, which aligns with the claim being evaluated.
Conclusion
Verdict: True
The claim that the U.S. government can face a default on its debt without action on the debt ceiling is accurate. The mechanisms in place, such as extraordinary measures, provide temporary relief, but they are not a long-term solution. If Congress does not raise or suspend the debt ceiling before these measures are exhausted, the government will be unable to fulfill its financial obligations, leading to a potential default.
