The Treasury Department has a dire warning for Congress: address the debt or risk default.

With the federal debt ceiling expected to be reached in August, Treasury Secretary Scott Bessent sent a letter imploring Congress to act, increasing the debt ceiling by mid-July.

The current debt ceiling expired in January but the Treasury has been able to use so-called “Extraordinary Measures” to continue to pay the nation’s bills. Those extraordinary measures will run out while Congress is in recess, Bessent warns.

“A failure to suspend or increase the debt limit would wreak havoc on our financial system and diminish America’s security and global leadership position,” he says in the letter.

Since taking office in January, President Trump has called for a balanced budget but Congressional leaders have been slow to make cuts that turn his call into a reality. The national debt currently sits at $36 trillion. Of that $4.7 trillion (roughly 13%) was added during President Biden’s four-year term. Interest payments on current debt now exceeds defense spending.

The budget deficit for the current fiscal year to-date (October 2024 – April 2025) is $1.05 trillion.

Republican governors and policy organizations continue to propose a balanced budget amendment to the Constitution as one solution to restrain the growing federal debt.

Without Congressional action, Bessent warns that the US could default on debt payments, face a government shut-down, or other consequences.

Earlier this year bond rating company Moody’s downgraded the US credit rating, expressing concerns for deficits, debt, and interest rates. S&P and Fitch’s issued similar downgrades to US credit ratings in 2011 and 2023, respectively.