Unless Congress and the Obama Administration strike a deal by early November to raise the $18 trillion debt ceiling, the Treasury will exhaust the extraordinary measures it has been using to keep the government operating and face the first default in borrowing and payment obligations in US history.
Advertisement
The Treasury Department has recommended that the debt ceiling be raised by November. 5, the report said.
The latest estimate moves forward the point at which the Treasury says it could fund the government’s operations on daily cash flow, raising the risk that it would be unable to make full payments to federal workers, soldiers, pensioners or bondholders. Republicans have yet to select a new speaker after Majority Leader Kevin McCarthy, R-Calif., bowed out of the race, which means Republicans may be hamstrung in dealing with the debt ceiling until they find a new leader.
Lew had advised in recent weeks that the Treasury’s cash balance had already fallen below the “prudent” minimum of $150 billion. “And there is no way to predict the irreparable damage that default would have on global financial markets and the American people”, Lew wrote.
The last time Congress hiked the debt ceiling in February 2014, only 28 House Republicans voted for it, while almost all the Democrats had to join in to help pass the legislation, 221-201.
“We have learned from the past that failing to act until the last minute can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers and negatively impact the credit rating of the United States”, he said.
That estimated “X” date – when Treasury won’t have enough money to pay what’s due – will come between November 10 and November 19, according to an analysis by the Bipartisan Policy Center.
Leadership is scurrying to address the issue before Boehner’s departure, but resistance from members of the House Freedom Caucus could make raising the limit hard.
Boehner has said he would like to complete as much work as possible before he is scheduled to step down on October. 29 and aides said Wednesday that the debt limit is still on his list of potential issues to resolve.
Advertisement
With the House GOP conference in turmoil, it will fall to Speaker John Boehner, R-Ohio, to shepherd a debt limit increase.
