WASHINGTON — The Treasury Department is now estimating that the extraordinary measures it’s been using to preserve the U.S. borrowing capacity since the debt limit was reached will be exhausted by Nov. 3 – two days earlier than a previous estimate.
Treasury Secretary Jack Lew provided the latest estimate in identical letters sent to members of Congress Thursday. “I respectfully urge Congress to take action as soon as possible, raise the debt limit without delay, and remove an unnecessary threat to our economy,” he wrote.
The United States reached its statutory debt limit in March and since then Treasury has been using the extraordinary measures to continue to meet its obligations. One of the extraordinary measures is the suspension of sales of State and Local Government Series securities (SLGS), which municipal bond issuers often purchase for their advance refunding escrows.
In letters Lew sent to Congress members on Oct. 1, he stated that the extraordinary measures would likely be exhausted on or about Nov. 5. The date was moved up two days based on Treasury’s most recent information. Over the past two weeks, “the trend in our projected net resources has continued to be negative, and our projections for the relevant period have declined an additional $4-6 billion,” Lew wrote.
When Treasury exhausts the extraordinary measures, it expects to be left with less than $30 billion to meet all of the country’s obligations, which would be “far short of net expenditures on certain days, which can be as high as $60 billion.” Treasury’s cash balance is already below $150 billion, which is a minimum that the department tries to maintain to protect against market disruptions.
“Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible,” Lew wrote.
If Congress doesn’t raise or suspend the debt limit, Treasury would be unable to meet all of its obligations for the first time in U.S. history. And when Congress hasn’t taken action on the debt limit until the last minute in the past, short-term borrowing costs have increased and the U.S. credit rating has been hurt, Lew said.
The Treasury Secretary also reminded Congress that “increasing the debt limit does not authorize any new spending. It simply allows Treasury to pay for expenditures Congress already has approved, in full and on time.”
