(Bloomberg) -- Treasury Secretary Scott Bessent indicated that the federal government is at risk of running out of room to make good on all of its payment obligations on time as soon as May or June.
"We are going to go onto the warning track sometime in May or June," Bessent said in an interview with Bloomberg Television Wednesday. "If the debt ceiling is resolved via reconciliation, then it has to be done" before the so-called X-date is reached, he said.
Republican lawmakers are now working on bill to extend the 2017 tax cuts, known as a reconciliation package, in which they're aiming to insert an increase in the federal debt limit. The ceiling kicked back in at the start of the year, since when the Treasury has been using special accounting maneuvers to make good on all obligations on time without breaching the borrowing limit.
Speaking later on CNN, Bessent said that the Treasury's borrowing authority "is going to run out in June or July."
Bessent's comments broadly tracked estimates from the nonpartisan Congressional Budget Office, which last week said that the Treasury would exhaust its accounting measures in August or September, though May was a risk if the department's borrowing needs were greater than expected.
Retaliation Warning
Democrats are so "discombobulated" that they likely cannot be counted on to cooperate in enacting a debt-ceiling measure via a bipartisan bill, Bessent said on CNN. The reconciliation bill would allow the Republican majorities in the House and Senate to bypass the other party.
With regard to trade, Bessent urged other economies against taking retaliatory steps against President Donald Trump's new set of retaliatory tariffs and said the figures unveiled Wednesday represented the "high end" of the duties, provided countries don't react with their own measures.
"I wouldn't try to retaliate," Bessent said on Bloomberg TV. "As long as you don't retaliate this is the high end of the number."
Trade Talks?
He spoke shortly after Trump unveiled a 10% universal baseline tariff for many trading partners, with much higher surtaxes on others — including a 34% rate for China and 20% levy on the European Union.
"This is the high end of the number barring retaliation," Bessent said. "As far as negotiations go — we'll see."
While other countries have reached out to Washington to engage on trade talks, the Treasury chief indicated the administration would "let things settle for a while."
"We'll see where it goes from here."
Turning to national security matters, Bessent said a team from Ukraine would be coming to the US either later this week or early next week to go over a proposed economic cooperation agreement between the two nations. He said the Ukrainians have hired counsel and that the deal is "ready on our side."
"We believe this deal so important for the American people, for the Ukrainian people, and for the peace process."
(Updates with further comments starting in fourth paragraph.)
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