News / Economy

    Obama Administration Sees Mid-October Default Deadline

    FILE - U.S. Treasury Secretary Jacob Lew listens during a tour of the AT&T Foundry in Palo Alto, California, Aug. 22, 2013. FILE - U.S. Treasury Secretary Jacob Lew listens during a tour of the AT&T Foundry in Palo Alto, California, Aug. 22, 2013.
    x
    FILE - U.S. Treasury Secretary Jacob Lew listens during a tour of the AT&T Foundry in Palo Alto, California, Aug. 22, 2013.
    FILE - U.S. Treasury Secretary Jacob Lew listens during a tour of the AT&T Foundry in Palo Alto, California, Aug. 22, 2013.
    Reuters
    The Obama administration warned Congress on Monday that the United States could run out of money to pay its bills soon after mid-October if lawmakers do not move swiftly to raise a limit on government borrowing.
     
    “Congress should act as soon as possible to protect America's good credit,” Treasury Secretary Jack Lew said in a letter to congressional leaders, urging action “well before any risk of default becomes imminent.”
     
    The government has been scraping up against its $16.7 trillion debt limit since May, but has avoid defaulting on any of its obligations by employing a number of emergency measures to manage its cash, like suspending investments in pension funds for federal workers.
     
    Lew said the government will exhaust its borrowing capacity in the middle of October and be left with about $50 billion in cash on hand, an amount that he said could conceivably be wiped out in a single day. That would make default imminent and could shake investors' confidence in the United States, he said.
     
    “Such a scenario could undermine financial markets and result in significant disruptions to our economy,” Lew added.
     
    A heated debate in Washington over the debt ceiling nearly led to default in 2011. This roiled financial markets at the time and helped prompt a Wall Street rating agency to downgrade America's debt rating.
     
    This year, Republicans are considering using the need to raise the debt ceiling as leverage for their agenda in Congress. The party is trying to weaken President Barack Obama's signature healthcare overhaul. Conservatives also want to reform tax laws and get Obama to approve a proposed oil pipeline.
     
    “The debt limit remains a reminder that, under President Obama, Washington has failed to deal seriously with America's debt and deficit,” said Michael Steel, a spokesman for House Speaker John Boehner.
     
    While Congress has already taken the tax and spending decisions that have fueled U.S. budget deficits, it also separately controls the limit on the nation's debt.
     
    Obama is vowing not to let the debt ceiling be a bargaining chip in other political discussions.
     
    “We will not negotiate with Republicans in Congress over Congress' responsibility to pay the bills that Congress has racked up, period,” said White House spokesman Jay Carney.
     
    Previously, the Obama administration had said Congress needed to act by early September, but a strengthening economy has boosted tax receipts, buying the government more time before it runs out of borrowing room.
     
    The non-partisan Congressional Budget Office has said the government might not exhaust its borrowing capacity until November, an estimate in line with private sector forecasts.

    You May Like

    Syrian Rebel Realignment Likely as al-Qaida Leader Blesses Split

    Jihadist group Jabhat al-Nusra splits from al-Qaida in what observers dub a ‘deception and denial’ exercise

    New India Child Labor Law Could Make Children More Vulnerable

    Concerns that allowing children to work in family enterprises will push more to work

    What Take-out Food Reveals About American History

    Carry-out food explains a lot about the changes taking place in society, so here's the deal with pizza, Chinese food and what racism has to do with taking food to go

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Uganda Unveils its First Solar-powered Busi
    X
    July 28, 2016 4:16 AM
    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United States

    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9017
    JPY
    USD
    104.72
    GBP
    USD
    0.7594
    CAD
    USD
    1.3160
    INR
    USD
    67.046

    Rates may not be current.