Congress will need to address the debt limit by November. 5 or risk a catastrophic default on the nation’s debt, according to Treasury Secretary Jack Lew. To remove these unnecessary and avoidable threats, I respectfully urge Congress to take action as soon as possible and raise the debt limit well before Treasury exhausts its extraordinary measures.
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Previously, outside analysts had estimated that the Treasury would be able to pay all of the government’s bills on time without breaching the debt ceiling through mid-November to mid-December.
Lew said the earlier-than-anticipated new “X date” estimate was due, in part, to lower-than-expected tax receipts.
Congress final elevated the debt limit in February 2014.
The new deadline is one week after House Speaker John Boehner (R-Ohio) is set to leave Congress. So it will either be one of the last items tackled by Boehner or the first on the docket for his likely successor, current House Majority Leader Kevin McCarthy (R-California). Analysts and officials have warned that missing payments could lead to economic calamity. “At that point, we would be left to fund the government with only the cash we have on hand, which we now forecast to be below $30 billion”, Lew wrote in the letter. In past debt-ceiling negotiations, talks have come down to days or hours before the deadline set by the Treasury secretary. Now, Congress will have to act earlier on the debt ceiling.
Congress is also looking to approve a long-term highway funding bill, and deal with a series of tax breaks that supporters want to extend.
Increasing the federal government’s borrowing limit above $ 18.1 trillion is required to forestall a primary-ever default on authorities obligations like curiosity funds and Social Security. But he did add that in the last several weeks, Treasury had seen a negative trend in its net resources, suggesting that, if anything, the deadline could move up.
Lew estimates the government will have less than $30 billion on hand by November. 5, and anticipates that the government’s immediate bills could exceed $60 billion.
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Again, Treasury’s estimates are subject to inherent variability and could change as we receive additional information about daily receipts, investments, and expenditures.
