U.S. Treasury starts last measures to preserve borrowing authority

WASHINGTON Tue Oct 1, 2013 7:59pm EDT

U.S. Treasury Secretary Jack Lew addresses the Economic Club of Washington D.C., in Washington, September 17, 2013. REUTERS/Jonathan Ernst

U.S. Treasury Secretary Jack Lew addresses the Economic Club of Washington D.C., in Washington, September 17, 2013.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - The U.S. Treasury on Tuesday started using its last tools for pushing back the date when the government will run out of legal borrowing authority, Treasury Secretary Jack Lew said.

In a letter to lawmakers, Lew said the Treasury Department was suspending some reinvestments of a government currency exchange fund and would also enter into a debt swap with the Federal Financing Bank and the Civil Service Retirement and Disability Fund.

He repeated past statements that these measures would allow it to continue below its $16.7 trillion limit for a little while longer, but that by October 17 the government will have exhausted its borrowing authority and will be left with about $30 billion in cash to pay the nation's bills.

"If we have insufficient cash on hand, it would be impossible for the United States of America to meet all its obligations," Lew said in a letter to lawmakers. "For this reason, I respectfully urge Congress to act immediately to meet its responsibility by extending the nation's borrowing authority."

After borrowing authority expires, Treasury by law would then have to rely on its remaining cash and incoming revenue to pay the country's obligations.

The nonprofit Bipartisan Policy Center estimates that the United States would begin defaulting on some obligations between October 18 and November 5.

Lew said the partial federal shutdown, which started after Congress failed to pass legislation to fund the government in the new fiscal year that began on Tuesday, would not "materially" impact Treasury's projections for when its borrowing authority will expire.

(Reporting by Jason Lange; Editing by Christopher Wilson and Will Dunham)

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Comments (1)
ExDemocrat wrote:
U.S. Senate Majority Leader Harry Reid (Dem., Nev.) and President Obama need to quit being so rigid and negotiate budget issues with the Republican-run House of Representatives. Both sides live in a democratic republic, and negotiation and working with the different sides of an issue is how things best get done under this type of system. Instead, the left of center politicians are demanding that only their voices be heard. If Democrats can’t become more moderate, and more fiscally responsible, the U.S. is headed to far worse problems than a temporary partial federal government shutdown and maybe a short time in default on U.S. Treasury bonds and notes.

Oct 02, 2013 5:15am EDT  --  Report as abuse
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