Treasury Secretary Jack Lew warned congressional leaders Wednesday that the debt ceiling will be reached “no later than Oct. 17,” at which point he'll have exhausted emergency borrowing measures and would have only about $30 billion on hand to pay the nation’s bills.
“This amount would be far short of net expenditures on certain days, which can be as high as $60 billion,” Lew wrote in a letter to Speaker of the House John Boehner. “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.”
The U.S. has been scraping up against the $16.7 trillion debt ceiling since May but has been able to avoid defaulting on any of its obligations by employing emergency measures to manage its cash, such as suspending investments in pension funds for federal workers.
The debt limit impasse that occurred in 2011 caused significant harm to the economy and a downgrade of the U.S.' credit rating.
“If Congress were to repeat that brinksmanship in 2013, it could inflict even greater harm on the economy,” Lew wrote. “And if the government should ultimately become unable to pay all of its bills, the result could be catastrophic.”