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

Reuters News
Posted: Nov 20, 2013 6:10 PM

By Jason Lange

WASHINGTON (Reuters) - The United States could start missing payments on its obligations sometime between March and June if lawmakers fail to 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.

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

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

It is unclear how much time that would buy, and the Congressional Budget Office said in a report that the cash "would probably be exhausted in March."

"However, the timing and magnitude of tax refunds and receipts ... could shift that date of exhaustion into May or June," the CBO said.

The non-partisan CBO's estimated dates were broadly in line with estimates made by private sector budget experts.

Separately, the administration said it would likely begin defaulting on its obligations within a month of February 7 if Congress does not raise the cap on government borrowing by then.

Although the Treasury has tools known as "extraordinary measures" to stretch out its cash, "There's no indication right now that extraordinary measures would last longer than a month," a Treasury official said.

This year, the Treasury was able to keep under the debt ceiling for about five months by doing things like stopping investments in some pension funds for federal workers.

(Editing by Cynthia Osterman and Dan Grebler)