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

Obama: I Will Do 'Everything I Can' to Close Guantanamo

US president says prison continues 'to inspire jihadists and extremists around the world' More

Sierra Leone Educates on Safe Ebola Burials

Also, country is improving at rapid response to isolated outbreaks, but health workers need to be even faster, officials say More

Religion Aside, Christmas Gains Popularity in Communist Vietnam

Increasingly wealthy Vietnamese embrace holiday due to its non-religious glamor, commercial appeal More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.