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article imageU.S. to exhaust borrowing capacity by October 17

By Dawn Denmar     Sep 26, 2013 in Politics
Jack Lew, U.S. Treasury Secretary, warned Congress that the United States would exhaust its borrowing capacity by Oct. 17, leaving about $30bn cash on hand. Lew urged Congress to raise $16.7 trillion borrowing limit to avoid upset in financial markets.
Lew's warning yesterday raised fears of a financial crisis and puts the government on the brink of financial default. The Congressional Budget Office also reported separately that the government would run out of free cash between Oct. 22 and Nov. 1.
Mr Lew's letter to congressional leaders said that one single day's net expenditure could be as high as $60bn, with money going out being excess of money coming in and the Treasury being forced to miss or delay payment of some bills.
He warned: "If the government should ultimately become unable to pay all of its bills, the results could be catastrophic."
The Treasury makes over 80 million individual payments each month, it would miss about 30 percent of these payments until the ceiling is raised by Congress again.
The Treasury needs to meet a $12 billion Social Security payment on Oct. 23 and a payment for interest on the public debt totaling $6 billion interest payment on Oct. 31. On Nov. 1 it needs to pay $18 billion for Medicare, $25 billion for Social Security, $12 billion for military pay and veterans' benefits and $3 billion for the Supplemental Security Income program.
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