The U.S. Treasury Department warned Congress on Thursday that if it does not raise the country's borrowing limit by Nov. 3, the government might not be able to pay its bills, reported The Washington Post.
Treasury Secretary Jack Lew wrote, in a letter to lawmakers, that the Treasury is expected to have exhausted its "extraordinary measures" to operate under the borrowing cap two days before previously estimated.
"At that point, we expect [the] Treasury would be left with less than $30 billion to meet all of the nation's commitments - an amount far short of net expenditures on certain days, which can be as high as $60 billion," Lew said in a letter, reports CNBC. "Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible. As I wrote previously, we anticipate that a remaining cash balance of less than $30 billion would be depleted quickly."
The U.S. government technically hit the statutory cap of total allowed debt back in mid-March, but the Treasury Department has been able to implement a variety of delay tactics to provide a grace period, according to The Week.
If the government runs out of cash, it may not be able to meet obligations on interest payments or Medicare and Social Security payments. A default on such obligations has never occurred before and would devastate financial markets, according to ABC News.
"In the absence of congressional action, [the] Treasury would be unable to satisfy all of these obligations for the first time in the history of the United States," Lew wrote.
The Bipartisan Policy Center, a Washington think tank, said it expects that the actual default would occur between Nov. 10 and Nov. 19.
Now it is up to Congress to raise the debit ceiling, but that could prove difficult with the Republican majority being in the midst of a serious leadership crisis. House Speaker John Boehner, R-Ohio, announced his resignation last month, saying his last day would be Oct. 31, and the party is now desperately searching for a successor, noted The Hill. Boehner more recently said he will stay on until a replacement is found.
That could improve the chances for a controversial debt limit increase, which would anger many conservatives who want to use the borrowing issue as leverage to force concessions from the White House, according to The Associated Press.
But even waiting until the last minute can have serious effects on businesses and consumer confidence, Lew said.
"We have learned from the past that failing to act until the last minute 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," he said.
He echoed similar sentiments at an International Monetary Fund meeting in Peru last Friday, saying, "Congress needs to act or we could be faced with a crisis," according to CNBC.
