Treasury continues to project that the extraordinary measures will be exhausted no later than October 17, 2013, at which point the federal government will have run out of borrowing authority. At that point, we will be left to meet our country’s commitments with only the cash on hand and any incoming revenues, placing our economy in a dangerous position.
If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations, including Social Security and Medicare benefits, payments to our military and veterans and contracts with private suppliers for the first time in our history.
At the same time, we’re relying on investors from all over the world to continue to U.S. hold bonds. Every week we roll over approximately $100 billion in U.S. bills. If U.S. bond-holders decided that they wanted to be repaid rather than continuing to roll over their investments, we could unexpectedly dissipate our entire cash balance.
Let me be clear: trying to time a debt limit increase to the last minute could be very dangerous. If Congress does not act and the United States suddenly cannot pay its bills, the repercussions would be serious.
Raising the debt limit is Congress’ responsibility because Congress, and Congress alone, is empowered to set the maximum amount the government can borrow to meet its financial obligations. Some in Congress have suggested that raising the debt limit should be paired with accompanying spending cuts and reforms.
I have repeatedly noted that the debt limit has nothing to do with new spending. It has to do with spending that Congress has already proves and bills that have already been incurred.
Failing to raise the debt limit would not make these bills disappear. The president remains willing to negotiate over the future direction of fiscal policy but he will not negotiate over whether the United States should pay its bills.
Certain members of the House and Senate also believe that it’s possible to protect our economy by simply paying only the interest on our debts while stopping or delaying payments on a number of our other legal commitments. How can the United States choose whether to send Social Security checks to seniors or pay benefits to Veterans? How can the United States choose whether to provide children with food assistance or meet our obligations to Medicare providers?
The United States should not be put in a position of making such perilous choices for our economy and our citizens. There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets.