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U.S. could run out of cash in March under debt ceiling - CBO
November 20, 2013 / 10:16 PM / 4 years ago

U.S. could run out of cash in March under debt ceiling - CBO

WASHINGTON, Nov 20 (Reuters) - The United States could start missing payments on its obligations some time between March and June if lawmakers don’t raise a legal limit on borrowing by early February, congressional analysts said on Wednesday.

The Obama administration was able to bump against the government’s debt ceiling for five months this year before it came to the brink of default.

Obama signed into law a bill last month that suspended a $16.7 trillion cap on the national debt until Feb. 7, when it will reset to whatever level the debt has reached.

Absent a decision to raise it again, the Treasury Department has tools to manage its cash a little longer before it starts missing payments.

It is unclear how much time those tools can buy, but the Congressional Budget Office said in a report that the government could run out of cash as early as March.

“However, the timing and magnitude of tax refunds and receipts ... could shift that date of exhaustion into May or June,” the CBO said in a report.

The CBO’s estimated dates were broadly in line with estimates made by private sector budget experts.

This year, the Treasury bumped up against the debt ceiling in May but was able keep under it for another five months by doing things like stopping investments in some pension funds for federal workers. These steps are known in Washington as the Treasury’s “extraordinary measures.”

They give the Treasury a buffer against an economically damaging default, and CBO noted that Washington will have the same tools available in 2014.

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