US Treasury Secretary Warns Debt Ceiling Will be Hit in Mid October

The US will hit its borrowing limit in mid-October and would likely be unable to pay all its bills soon after, the Treasury warned on Monday.

In a letter to Republican House speaker John Boehner that sets the stage for another round of budgetary brinkmanship, Treasury secretary Jack Lew said: “Congress should act as soon as possible to protect America’s good credit.”

Lew warned failure to act soon could do “irreparable harm” to the US economy.

Government officials and economists had been expecting the US to reach its $16.69tn “debt ceiling” this autumn, but mid-October is earlier than some had expected.

The news comes as Congress prepares for yet another fight over whether or not to raise the debt ceiling in the coming weeks.

Lew said the Treasury would reach its borrowing limit by mid-October and would then be left to fund the 80m payments per month, including military salaries and social security cheques, with a cash balance estimated at $50bn.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza