Treasury action call as US hits cash crisis
US Treasury Secretary Jacob Lew has told Congress that the government will run out of money to pay its bills in mid-October unless lawmakers raise the country's borrowing limit, which is capped at $16.7trn.
Lew said in a letter to House of Representatives Speaker John Boehner that the government is running out of accounting manoeuvres it has used to avoid hitting the borrowing limit. Lew pressed for action so the Treasury can keep paying its bills.
The government is spending more than it takes in, running up annual deficits in excess of $1trn in each of the past four budget years. It has been borrowing the difference to meet its obligations.
Lew said it's impossible for Treasury to predict exactly when borrowing limit will be reached. But he warns if action isn't taken, the government could be left with $50bn in cash by mid-October.
Lew said there cannot be any question that the United States is a country that pays its bills: "It's not as if we get to go back and undo the commitments we made."
Earlier this year, Congress temporarily suspended the borrowing limit so lawmakers could focus on other budget debates. Treasury has kept the government operating for several months with its book-keeping manoeuvres.
Republicans want to reduce future deficits by cutting back sharply on spending. Democrats have proposed a mix of spending cuts and tax increases. The issue awaits resolution when lawmakers return from August recess.