Today, Secretary Lew sent the following letter to Congress regarding the debt limit:
October 1, 2015
The Honorable John A. Boehner
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Speaker:
I am writing to follow up on my previous letters regarding
the debt limit and to provide additional information regarding the Department
of the Treasury’s ability to continue to finance the government.
In recent letters, I projected that the extraordinary
measures we have been employing to preserve borrowing capacity would not be
exhausted before late October 2015 and that they likely would last for at least
a brief additional period of time. I
cautioned, however, that Treasury’s estimates regarding the debt limit are
subject to inherent variability, given the challenges of forecasting the timing
and amount of thousands of daily government transactions.
Over the past ten days, we have received quarterly corporate
and individual tax receipts and additional information about the activities of
certain large trust funds, including military retirement trust funds. The tax receipts were lower than we
previously projected, and the trust fund investments were higher than
projected—resulting in a net decrease of resources available to the United
Based on this new information, we now estimate that Treasury
is likely to exhaust its extraordinary measures on or about Thursday, November
5. At that point, we would be left to
fund the government with only the cash we have on hand, which we currently
forecast to be below $30 billion.
This amount would be far short of net expenditures on certain days,
which can be as high as $60 billion.
Moreover, given certain payments that are due in early to mid- November,
we anticipate that our remaining cash would be depleted quickly. Without sufficient cash, it would be
impossible for the United States of America to meet all of its obligations for
the first time in our history.
Again, Treasury’s estimates are subject to inherent
variability and could change as we receive additional information about daily
receipts, investments, and expenditures.
Over the last several weeks, the trend in our projected net resources
has been negative, which has reduced the amount of time that we expect to be
able to finance the government. The
ultimate date that Treasury exhausts extraordinary measures, however, could be
sooner or later than November 5. We
will continue to update Congress as we receive additional information.
Finally, in my previous letter, I noted that Treasury’s cash
balance already had fallen below $150 billion. Maintaining this minimum prudent balance
helps protect against potential market interruptions, but it does not increase
the debt limit or alter the time we can continue to pay the nation’s bills. Treasury’s cash balance rose temporarily after
the September 15 tax deadline. Today, we
anticipate that it will again fall below the minimum balance, and we expect it
will continue to fall until Congress raises the debt limit.
Protecting the full faith and credit of the United States is
the responsibility of the United States Congress. There is no way to predict the catastrophic
damage that default would have on our economy and global financial markets. Moreover, we have learned from previous debt
limit impasses that failing to act until the last minute and engaging in
partisan brinksmanship can cause serious harm to business and consumer
confidence, raise short-term borrowing costs for taxpayers, and negatively
impact the credit rating of the United States. To remove these unnecessary and avoidable
threats, I respectfully urge Congress to take action as soon as possible and
raise the debt limit well before Treasury exhausts its extraordinary measures.
Jacob J. Lew
Identical letter sent to:
Honorable Nancy Pelosi, House Democratic Leader
Honorable Mitch McConnell, Senate Majority Leader
Honorable Harry Reid, Senate Democratic Leader
Honorable Paul Ryan, Chairman, House Committee on Ways and Means
Honorable Sander M. Levin, Ranking Member, House Committee
on Ways and Means
Honorable Orrin G. Hatch, Chairman, Senate Committee on Finance
Honorable Ron Wyden, Ranking Member, Senate Committee on Finance
Members of the 114th Congress