Fact Check: "The U.S. government can face a default on its debt without raising the debt ceiling."
What We Know
The U.S. government operates under a statutory debt limit, commonly referred to as the debt ceiling, which is the maximum amount of debt that the Department of the Treasury can issue to finance government operations. As of January 2, 2025, this limit was reinstated at $36.1 trillion, coinciding with the total outstanding debt at that time (Congress.gov).
When the Treasury reaches this limit, it can employ "extraordinary measures" to continue funding government operations temporarily without breaching the ceiling. These measures include pausing investments in certain federal retirement funds and other financial maneuvers that allow for additional borrowing (CBO). According to projections, if the debt ceiling is not raised or suspended, the Treasury's ability to finance operations could be exhausted by August or September 2025, leading to potential delays in payments or defaults on obligations (BPC).
Analysis
The claim that the U.S. government can face a default without raising the debt ceiling is partially true. The government can indeed continue to operate temporarily without raising the debt ceiling by utilizing extraordinary measures. However, these measures are limited in duration and effectiveness. The Congressional Budget Office (CBO) estimates that these measures will likely be exhausted by late summer 2025 unless Congress intervenes to raise or suspend the debt ceiling (CBO, BPC).
If the extraordinary measures are exhausted and the debt ceiling remains unchanged, the government would be unable to meet all its financial obligations, leading to a default. This situation is not merely theoretical; it is a real risk that financial analysts and institutions are closely monitoring (BPC).
The reliability of the sources used in this analysis is high. The Congressional Budget Office (CBO) is a nonpartisan agency that provides budget and economic information to Congress, while the Bipartisan Policy Center (BPC) is a reputable think tank focused on policy solutions. Both sources provide a clear understanding of the implications of the debt ceiling and the potential for default.
Conclusion
The claim that the U.S. government can face a default on its debt without raising the debt ceiling is partially true. While the government can temporarily avoid default through extraordinary measures, these measures are not sustainable in the long term. If Congress does not act to raise or suspend the debt ceiling, a default is likely to occur once these measures are exhausted.
