We might have avoided a government shutdown (for now) but barring any last minute actions by Congress, we're still on track to default on our obligations.
Today, Treasury Secretary Jacob Lew sent another letter to Congress regarding the debt limit and he didn't have good news. In the letter, he noted that while he had previously "projected that the extraordinary measures we have been employing to preserve borrowing capacity would not be exhausted before late October 2015" and that funds "likely would last for at least a brief additional period of time," he's changing his tune.
Referencing the most recent due date for quarterly tax receipts and corporate tax returns on extension, he noted that "tax receipts were lower than we previously projected." Making matters worse, trust fund requirements, including those to be set aside for military retirement, were higher than projected. The result? A net decrease of available resources. Based on this information, Secretary Lew has adjusted his dates forward and now estimates that the Treasury will exhaust available resources and extraordinary measures on or about Thursday, November 5. That date could nudge up or down a few days, depending on receipts and expenditures.
So what does all of this mean? According to Secretary Lew, after that date, we would be left to fund the government with only the cash we have on hand. Those figures work out to less than $30 billion. That amount, says Secretary Lew, "would be far short of net expenditures on certain days, which can be as high as $60 billion." Additionally, since certain payments are due in early to mid-November, making those payments would deplete the remaining cash more quickly. The result. "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."
(For more on the debt ceiling, including its history, click here.)
Secretary Lew sent the letter, he says, because "[p}rotecting the full faith and credit of the United States is the responsibility of the United States Congress." That's quite a nerve-wracking concept these days, a fact that even Secretary Lew acknowledged by chiding, "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."
Originally, Congress had intended to tackle the debt ceiling crisis around the same time as it fixed the appropriations bill. But with a new deadline looming, roughly a month away and several weeks short of the December 11 deadline that many had expected, there's a new urgency to getting to work now. Let's just hope that someone in Congress is paying attention.
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