Business
US Govt To Run Short Of Cash By Oct 17
The United States Trea
sury Secretary, Jack Lew said last Wednesday that he now estimates he will have less cash on hand to pay the country’s bills in mid-October than he previously thought.
Instead of the $50 billion he estimated a few weeks ago, he now thinks the cash balance will be closer to $30 billion, according to a CNN report.
“This amount would be far short of net expenditures on certain days, which can be as high as $60 billion,” Lew said in a letter to lawmakers. “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.”
He also said he now estimates the so-called extraordinary measures that the Treasury Department has been taking since the spring will be exhausted no later than October 17.
Lew also noted, as he has in the past, that his estimates are based on a number of factors that are not entirely predictable — such as the amount of revenue flowing into federal coffers on any given day.
Treasury handles about 80 million payments a month. Those payments are not evenly spaced out. So on some days more is owed than on others.
And by mid-October, if Congress hasn’t raised the borrowing limit, Treasury will only be able to pay the bills that come in with the cash it has on hand plus whatever revenue comes in.
Payments include IRS refunds, Social Security and veterans benefits, Medicare reimbursements for doctors and hospitals, bond interest owed investors, payments to contractors and paychecks for federal workers and military personnel.
Based on Lew’s latest estimate, the Congressional Budget Office now projects Treasury may exhaust its cash balance and therefore no longer be able to pay all the country’s bills in full and on time sometime between October 22 and October 31. The CBO, however, also said the “x” date — as it’s known — could “fall outside that range.”
Those projections are sooner than CBO had been anticipating a few weeks ago. Among other reasons, corporate tax receipts have fallen short of expectations since then.