The United States appears to be on the brink of the once unimaginable. If the legal limit on the nation’s borrowing is not raised to pay for the bills already incurred by Congress, the richest country on earth will be unable to pay all of its bills on time and in full for the first time. Treasury Secretary Jack Lew warned Speaker John Boehner earlier this month that debt ceiling D-Day would be Oct. 17. That’s when Lew said he will have exhausted all the “extraordinary measures” he has used since May to keep borrowing under $16.7 trillion. Cash on-hand that day: approximately $30 billion.
Even at this late hour, there are members of Congress who pooh-pooh all the hair-on-fire predictions of economic apocalypse. On MSNBC this morning, Rep. Michael Burgess (R-Tex.) called the debt-ceiling deadline “the arbitrary date of the 17th as far as what we’ve been given by the secretary of the treasury.” But on MSNBC’s “The Last Word” last night, former Treasury official Mark Patterson put the whole situation into perspective with an apt analogy.
O’Donnell: What would you say to House Republicans who are saying tonight, “Do we really hit some dramatic point on Thursday?”
Patterson: Right, well there is a lot of misunderstanding about that date. The important thing to know is the 17th is the day after which Treasury can no longer guarantee that it can make all payments. The treasury secretary has not said there will not be any cash left on that day. The fact is he has estimated he’ll have $30 billion. And since we have had a shut down, maybe he will have a little more than that.
This is kind of like the idea of driving with your car on empty, about to go into the desert and passing the last gas station intentionally and say, “I will take my chances and maybe there will be another gas station on down the road in the desert.” That’s what going past the 17th is about. You might be able to go farther, and you just might because cash does come in over the transom at Treasury, but you just don’t know how far you can make it.
According to the latest revision from the Bipartisan Policy Center (BPC), the United States might not make it very far. “The ‘X Date’ — the date on which the United States will be unable to meet all of its financial obligations in full and on time – has narrowed to between October 22 and November 1,” the think tank warns. That’s basically two business days between the 17th and the 22nd. BPC notes that Treasury must cut $73 billion in checks between Oct. 23 and Nov. 1.
“The bottom line is that beyond [Oct. 17], we are in unchartered waters — with no ability for the Treasury to borrow. After that date, the risks and uncertainties will continue to increase,” said Shai Akabas, senior economic policy analyst at BPC. “No one knows exactly when the market will have a severe reaction or when the first payment will be missed by Treasury, but the risks grow with each day that the issue is unresolved.”
With House conservatives balking at Boehner’s plan to raise the debt ceiling and reopen the government, we’re no closer to resolution. In fact, we’re running on empty.
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