WASHINGTON – The Treasury Department said Thursday that Congress must raise the debt limit by Nov. 3 or the federal government risks default.
The new deadline is two days earlier than estimated at the start of the month and adds pressure on lawmakers to increase the $18.1 trillion debt limit, a politically volatile issue that pits conservatives against the Obama administration.
In a letter to congressional leaders, Treasury Secretary Jacob J. Lew said that no later than Nov. 3 his agency would exhaust all the so-called extraordinary measures it has been using to juggle the nation’s finances and continue borrowing after the debt limit was technically reached in March.
“At that point, we expect Treasury would be left with less than $30 billion to meet all the nation’s commitments – an amount far short of net expenditures on certain days, which can be as high as $60 billion,” Lew said of the new deadline.
“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. “And there is no way to predict the irreparable damage that default would have on global financial markets and the American people.”
The U.S. would not default Nov. 3, but with no borrowing authority after that date, the nation would be at risk of default in the following days because it would have to depend only on incoming revenues to pay major bills. Those bills include $3.1 billion in federal salaries on Nov. 6, $14 billion in Social Security payments on Nov. 10 and $30.4 billion in interest on Treasury securities on Nov. 16, according to the Bipartisan Policy Center think tank.
In a recent analysis, the center estimated the Treasury would run out of enough cash to meet all of its financial obligations between Nov. 10 and Nov. 19.
On Wednesday, the Congressional Budget Office said the Treasury would “begin running a very low cash balance in early November” and would deplete it sometime during the first half of the month.
Lew said Thursday that projections of available revenue next month have declined by $4 billion to $6 billion over the past two weeks. The CBO said the Treasury’s cash balance at the start of October was smaller than expected in part because of a larger-than-expected budget deficit.
Republican congressional leaders have said they do not want to trigger a default but are expected to push for spending cuts in exchange for lifting the debt limit. President Barack Obama has said he would not negotiate over a debt limit increase because it is needed to pay for spending Congress already has authorized.
“We have received the secretary’s letter with the updated date and will continue to work on this issue,” said Emily Schillinger, a spokeswoman for House Speaker John A. Boehner, R-Ohio.
Boehner has said he wants to resolve some outstanding issues before he steps down from the post at the end of the month, and his staff has indicated an increase in the debt limit is possible.
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