WASHINGTON - The U.S. government is getting a new borrowing cap, almost four months after Washington defused October's government shutdown and debt crisis.
WASHINGTON — The U.S. government is getting a new borrowing cap, almost four months after Washington defused October’s government shutdown and debt crisis.
The new limit on borrowing is expected to be about $17.2 trillion. It means that Treasury Secretary Jacob Lew will have to employ bookkeeping maneuvers to keep the government functioning until Congress further raises the borrowing limit.
In a letter to congressional leaders yesterday, Lew warned that he has less maneuvering room now than he had last year, when such “extraordinary measures” bought five months for the government to keep borrowing at the previous $16.7 trillion debt ceiling.
Lew said he could not be confident that the extraordinary measures would last beyond Feb. 27.
“At that point, Treasury would be left with only the cash on hand and any incoming revenue to meet our country’s commitments,” Lew said. He said the cash on hand likely will total about $50 billion.
He said IRS payments of tax refunds can total as much as $10 billion to $15 billion on a single day and the government’s total daily expenditures can be as high as $60 billion on certain days.
“If Treasury has insufficient cash on hand, it would be impossible for our nation to meet all of its obligations for the first time in history,” Lew said. Without enough money to meet interest payments on current debt, the government would be forced into a market-rattling default.
Lew said “Time is short,” especially given that Congress is scheduled to be out of session during part of the next three weeks.
“I respectfully urge Congress to move as quickly as possible, raise the debt limit and provide certainty to the economy and to financial markets,” Lew said.
Republican officials said their House leadership is inclined to add legislation to the debt-limit measure that would restore a full cost-of-living increase in retirement benefits that are collected by veterans younger than 62. Congress shaved the annual increases slightly as part of a budget measure late last year. The proposal is highly popular among Republicans, many of whom might be persuaded to raise the debt limit if it were included.
Treasury’s first step to create borrowing room under the new cap is to temporarily suspend sales of U.S. Treasury securities to state and local governments. That started yesterday at noon.