September 26, 2013 - 09:37 AMT
PanARMENIAN.Net - The U.S. will hit its debt ceiling by October 17, leaving the government with half the money needed to pay its bills, the Treasury Secretary has warned, according to BBC News.
Jack Lew said that unless the U.S. is allowed to extend its borrowing limit, the country will be left with about $30bn to meet its commitments. "Net expenditures on certain days can be as high as $60bn," he said.
The U.S. government and Republicans are at stalemate over extending the credit limit needed to avoid default.
President Barack Obama and the Democrats have said they will not negotiate with Republicans over their demand that the government agrees budget cuts in return for backing a rise in the borrowing limit.
Lew's comments underline how close Washington is to running out of money. Failure to reach a deal would be "catastrophic" for the U.S. economy, he said in a letter to House Speaker John Boehner.
"Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30bn to meet our country's commitments.
"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, urging Congress to "act immediately" and increase the borrowing ceiling, which has been limited at $16.7 trillion since May.
Lawmakers have been at loggerheads over raising the debt ceiling because President Obama and Democrats want a "clean" increase, according to CNN.
They note that raising the ceiling doesn't give Congress a license to spend more but rather allows the country to pay the bills it has already incurred. Those obligations are the result of commitments lawmakers from both parties have approved over the years.
Republicans, meanwhile, are insisting that any increase in the debt ceiling be tied to spending cuts and, among some conservatives, the defunding and delay of Obamacare.
House Republicans have proposed that absent a debt ceiling increase, Treasury could be allowed to prioritize which bills it pays with the funds it has on hand and that the top two priorities should be paying interest on the debt to bondholders and making payments to Social Security recipients.
Treasury has said that's unworkable.
"Any plan to prioritize some payments over others is simply default by another name," Lew wrote. "It would represent an irresponsible retreat from a core American value: We are a nation that honors all of its commitments."
Washington faced a similar impasse over its debt ceiling in 2011. Republicans and the Democrats only reached a compromise on the day the government's ability to borrow money was due to run out.
In his letter, Lew reminded Congress that the 2011 battle "caused significant harm to the economy".
That fight was resolved just hours before the country could have defaulted on its debt, but nevertheless led to ratings agency Standard & Poor's downgrading the U.S. for the first time ever.
The 2011 compromise included a series of automatic budget cuts known as the "sequester" which came into affect earlier this year.