On October 17, the government will be down to its last $30 billion and no longer be able to pay its bills without an increase in the debt ceiling, Treasury Secretary Jack Lew said in a letter on Wednesday. Here's why not.
The amount of money that Treasury has on-hand fluctuates from day-to-day. Money comes in; bills get paid. (The natural instinct is to compare that process to a household budget. This explains why you shouldn't.) Each weekday, the government releases a report of those transactions. On Monday, for example, we spent $1.6 billion on Medicare, $253 million on employee salaries. We took in $9 billion in income taxes and $817 million in "public debt cash issues." You can also see how far we are under the debt ceiling, the legal limit to how much debt the government can assume to pay bills it has accrued. The limit is currently $16,699.421 billion. We're about $25 million shy of that.
Here's the fluctuation in Treasury's balance in millions over the past few weeks, based on those reports.
It's often at or around $30 billion. So what makes October 17 special?
Brandi Hoffine, spokesperson for Treasury, explains. That date "is when Treasury exhausts the extraordinary measures we’ve been using to stay underneath the debt limit." Lew, in an August letter to Congress explained that the department would resort to "extraordinary measures" to pay bills if the debt ceiling wasn't raised. Treasury's ability to do that is running out. "At that point, we will no longer have borrowing authority," Hoffine explained, "and will be left to finance the government with only the cash we have on hand."
Lew's letter notes:
This amount would be far short of net expenditures on certain days, which can be as high as $60 billion. If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.
In order to avoid that undesired first, Congress simply needs to lift the debt ceiling. Which they'll get to once a new government funding resolution is passed, which needs to happen before October 1. And assuming that congressional Republicans don't force a government shutdown while trying to link Obamacare defunding to the debt ceiling vote.
In other words: expect more stressed-out letters from Jack Lew for the next two weeks.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.