There are just 52 days until the United States government runs out of money.
Even the secretary of the Treasury isn’t quite sure.
One thing is certain: With the passing of August, the official accounting of the U.S. debt has remained stuck at exactly $16,699,396,000,000 for another month – and, as of Wednesday, 109 days in a row.
The debt has been frozen at that amount because of an accounting trick Treasury Secretary Jack Lew calls “extraordinary measures.”
Those measures have prevented the government from defaulting on its obligations and allowed it to keep borrowing for 108 days, while keeping the official debt just $25 million below the legal debt limit set by Congress of $16,699,421,000,000.
Out of cash
But Lew knows those extraordinary measures cannot last forever, and the clock is ticking. But he doesn’t know exactly when midnight will strike.
One month ago, Lew estimated he could keep borrowing until Oct. 11, the last day Congress is in session before the Columbus Day recess.
But last week, he revised his estimate to an imprecise “middle of October” deadline before the federal government can no longer borrow the money it needs to keep running.
Lew has sent three letters to House Speak John Boehner, R-Ohio, to explain the extraordinary situation since May, when federal borrowing hit the legal debt limit.
The most recent letter, sent Aug. 26, revealed the U.S. will be down to just $50 billion actual cash on hand by the middle of October.
That’s all that will be left to fund Social Security, Medicare, federal employee salaries and other obligations included in the 80 million payments the federal government makes each month.
But it would not be enough.
The latest round of the dilemma began May 17, when Lew wrote to Boehner to inform him, having nearly hit the debt limit, the Treasury Department would begin using more extraordinary measures, such as suspending certain pension contributions to “free up approximately $260 billion in headroom under the limit.”
How we got here
The national debt continues to rise because the U.S. Treasury spends more money than it brings in through taxes, fees and other revenue.
The difference between spending and revenue, or annual deficit, is much smaller this year, but it is still expected to be around $600 billion for the fiscal year that ends Sept. 30.
The U.S. government actually hit its $16.4 trillion debt limit at the end of last year, but the Treasury Department began using the extraordinary measures to help delay default until Congress agreed to suspend the debt limit through May 18.
The next day, the debt limit was raised to almost $16.7 trillion.
Lew then announced a way to allow the government to pay its bills until September.
Taxpayer-owned Fannie Mae would make a one-time dividend payment of nearly $60 billion to the U.S. government.
Thanks to a housing market recovery, the fortunes of the bailed-out housing finance corporation had improved enough to pay the dividend after posting a record first-quarter profit.
Lew had thought the Treasury Department would stop using the extraordinary measures on Aug. 2.
But on that day, he wrote another letter to Boehner, explaining his new estimate was the government would need to keep using the measures until Oct. 11 to keep borrowing without exceeding the legal limit.
The politics of money
In that letter, Lew also recommended Congress increase the debt ceiling, warning of drastic consequences if it did not do so.
“I respectfully urge Congress to protect America’s good credit and avoid the potentially catastrophic consequences of failing to act by increasing the debt limit in a timely fashion,” Lew wrote.
Then Lew sent Boehner another letter on Aug. 26 saying Treasury could keep borrowing until “the middle of October” and also warning the speaker the government would no longer be able to pay its bills after mid-October unless Congress raised the debt ceiling.
Lew is pleading with lawmakers to raise the debt limit again, because a last-minute deal to do so in 2011 led to the first-ever downgrade of the U.S. credit rating and automatic budget cuts on March 1 known as the sequester.
Analysts fear, if the value of Treasury securities come into question because the U.S. is not paying its bills, the bond and stock markets could dive.
Also looming, the White House and Congress must decide on a separate agreement on how to fund government operations beyond Sept. 30.
Failure to do so could cause a partial government shutdown.
Additionally, many conservatives are pledging to support bills keeping essential operations running while providing no funds for the implementation of Obamacare.
The White House is blaming government spending on Congress and says it will refuse to even consider adhering to the debt limit.
“We will not negotiate with Republicans in Congress over Congress’ responsibility to pay the bills that Congress has racked up, period,” said White House Press Secretary Jay Carney last week.
Boehner has pledged to support raising the debt ceiling only if accompanied by an even greater amount of cuts in spending, and is predicting “a whale of a fight” with President Obama over the debt ceiling.
“I wish I could tell you it was going to be pretty and polite, and it would all be finished a month before we’d ever get to the debt ceiling. Sorry, it just doesn’t work that way,” Boehner observed.
“If this were easy to do, somebody over the last 20 or 30 years would have gotten it done. We’re going to do it this fall,” he promised.
The stopped clock
The public first became aware the debt limit had not officially changed for weeks back in July, when Rep. Michele Bachmann, R-Minn., wondered whether the government was “cooking the books.”
As WND reported, when Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee, Bachmann asked how there could be no increase reported in the total debt when the government was racking up about $4 billion a day in new debt.
When he could not provide an answer and referred her to the Treasury Department, Bachmann wondered if there was a political motive.
“I asked whether the Treasury Department was cooking the federal government’s books as it was reported that the Feds debt balance sheet remained at $16,699,396,000,000 for 56 days straight, presumably so the Treasury Department wouldn’t officially register that once again the Congress had exceeded its legal borrowing limits.”
For it to conveniently stay there for 56 straight days, Bachmann implied, strained credulity.
The lawmaker noted during the hearing the U.S. government added more than $400 million in debt during Bernanke’s appearance alone.
“Knowing that, how could he explain the Treasury balance sheet officially stood still for 56 days? Apparently, ignorance is bliss, for bureaucrats,” she concluded.