The government is closer to running out of money to pay its bills than previously thought — about $20 billion short of previous estimates, the Treasury Department warned Wednesday
Treasury Secretary Jacob Lew said the government would be left with just $30 billion in cash available "no later" than Oct. 17; he said officials had predicted in late August there would be $50 billion to fund the government on Oct. 15.
The Congressional Budget Office predicted the $30 billion would dry up sometime between Oct. 22 and Oct. 31 if legislation isn't enacted to raise the $16.7 trillion debt limit, The Wall Street Journal reported.
Lew's letter marks the first time he has given a date certain for when the government would hit the debt ceiling and comes as Congress is at another impasse on how to keep the government running and pay its past bills.
"I think people don't understand what this does to the market psychology. It's not within Congress' full control," Steve Bell, economic policy director for the Bipartisan Policy Center and a former managing director of Salomon Brothers, told USA Today.
The nation has been at the debt limit since May 17. Since then, the Treasury Department has undertaken what it calls "extraordinary measures," which include delaying pension fund payments and drawing down an emergency fund.
Once those measures are exhausted, the government would have only enough money to pay its bills as it has revenue on any given day.
As of Oct. 17, the Treasury expects its cash-on-hand will be reduced to $30 billion. The government can spend as much as $60 billion in a single day.
"If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history," Lew said.
That little cash could make it difficult, if not impossible, for the government to pay the roughly $55 billion in Social Security, Medicare, and military payments due Nov. 1, The Wall Street Journal noted.
Lew's warning comes as Congress debates another measure that would authorize spending for the new fiscal year beginning Oct. 1. A resolution passed by the Republican-led House would keep government spending roughly at current levels and extend the debt ceiling — but only for paying the principal and interest on the debt.
The Obama administration opposes the pay-the-debt-first plan, which Lew called "default by another name."
"The debt ceiling must be raised," White House spokesman Jay Carney said Wednesday. "This cannot and should not be a matter of negotiation."
Unlike the previous budget battles, there appear to be no back-room negotiations aimed at crafting a comprehensive deal that might offer a respite, or even a small deal to get past the looming deadlines — both on funding the government and raising the borrowing limit, the Journal reported.
"I think we've got this false sense of security," Sen. Mark Warner, a Virginia Democrat, told the Journal. "This time, the wolf really could be at the door."
House Speaker John Boehner, a Republican from Ohio, has promised a "whale of a fight" on the borrowing limit, the Journal noted.
House Budget Committee Chairman Paul Ryan of Wisconsin said Republicans are hoping to engage the White House in some kind of deficit-reduction agreement that focuses on policies lawmakers believe will promote economic growth. "We need a down payment on the debt," he told the Journal.
But how the debt ceiling fight plays out depends in part on how or whether Congress agrees to fund the government.
"I hope our central focus will be on dealing with our longer-term fiscal issues,'' said Republican Sen. Bob Corker of Tennessee.
The White House and Democratic lawmakers, meanwhile, are pre-emptively blaming Republicans for any fallout from not raising the debt ceiling.
"What you're seeing is people who actually believe that it's a legitimate tactic to blow up the country in order to achieve a goal, which is to get rid of Obamacare," said Democratic Rep. Peter Welch of Vermont, who called it "pretty wild behavior."
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