Tags: default | debt limit | hike | CBO

Default Could Start at End of October Without Debt Limit Hike, CBO Chief Warns

Tuesday, 17 September 2013 01:02 PM

The government could run out of cash to pay its bills in full and on time sometime between the end of October and the middle of November if lawmakers fail to increase its $16.7 trillion borrowing cap, Congressional Budget Office Director Doug Elmendorf said on Tuesday.

Elmendorf told reporters that the Treasury Department's assessment that it'll run out of borrowing authority and have just $50 billion cash on hand in mid-October "sounds plausible."

The government has never defaulted on its obligations and Treasury Secretary Jacob Lew warned Tuesday that Congress needs to act to increase the debt limit by mid-October but he warned Republicans that President Barack Obama will never go along with their demand to derail implementation of the new health care law as part of a measure to fund the government or increase the debt limit.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

"Efforts to either defund or delay the Affordable Care Act are unacceptable," Lew told the Economic Club of Washington. "That is not a path towards something that can ultimately be signed into law."

CBO Director Doug Elmendorf also said that CBO's estimate in May that the government will run a $642 billion deficit this year is proving a little too optimistic. Elmendorf said that slightly weaker revenues than expected will likely push that figure higher but that the final deficit tally for the 2013 budget year ending Sept. 30 will still register below $700 billion.

Elmendorf made his remarks as the agency released an updated study of the government's long-term budget ills.

It says that federal health care and retirement programs threaten to overwhelm the federal budget and harm the economy in coming decades unless Washington finds the political will to restrain their inexorable growth. The long-term pressures promise to quickly reverse recent improvements in the deficit.

Tuesday's Congressional Budget Office report says that government spending on health care and Social Security would double relative to the size of the economy in 25 years and that spending on other programs like defense, transportation and education would decline to its smallest level by the same measure since the Great Depression.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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The government could run out of cash to pay its bills in full and on time sometime between the end of October and the middle of November if lawmakers fail to increase its $16.7 trillion borrowing cap, Congressional Budget Office Director Doug Elmendorf said.
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2013-02-17
Tuesday, 17 September 2013 01:02 PM
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