From Treasury Secretary Jack Lew to the 144th Congress of the United States of America.
In recent letters, I projected that the extraordinary measures we have been employing to preserve borrowing capacity would not be exhausted before late October 2015 and that they likely would last for at least a brief additional period of time. I cautioned, however, that Treasury’s estimates regarding the debt limit are subject to inherent variability, given the challenges of forecasting the timing and amount of thousands of daily government transactions.
Over the past ten days, we have received quarterly corporate and individual tax receipts and additional information about the activities of certain large trust funds, including military retirement trust funds. The tax receipts were lower than we previously projected, and the trust fund investments were higher than projected — resulting in a net decrease of resources available to the United States government.
Based on this new information, we now estimate that Treasury is likely to exhaust its extraordinary measures on or about Thursday, November 5. At that point, we would be left to fund the government with only the cash we have on hand, which we currently forecast to be below $30 billion. This amount would be far short of net expenditures on certain days, which can be as high as $60 billion. Moreover, given certain payments that are due in early to mid-November, we anticipate that our remaining cash would be depleted quickly. Without sufficient cash, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.
[W]hen the Treasury’s cash balance falls below $150 billion we lose the ability to protect against potential market interruptions. This minimum does not increase the debt limit or alter the time we can continue to pay the nation’s bills. Today, we anticipate that it will again fall below the minimum balance, and we expect it will continue to fall until Congress raises the debt limit.
Protecting the full faith and credit of the United States is the responsibility of the United States Congress. There is no way to predict the catastrophic damage that default would have on our economy and global financial markets. Moreover, we have learned from previous debt limit impasses that failing to act until the last minute and engaging in partisan brinksmanship 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. To remove these unnecessary and avoidable threats, I respectfully urge Congress to take action as soon as possible and raise the debt limit well before Treasury exhausts its extraordinary measures.
Posted: October 1st, 2015 under Media.