SKIP TO MAIN CONTENT

US to exhaust funds without debt hike

US Treasury Secretary Jacob Lew says the partial government shutdown changes nothing, and America will still run out of money without a debt ceiling hike.

2 min read

Published

Updated

Source: AAP


Skip to article content

The US Treasury says the government shutdown does not affect its position and it will still run out of funds on October 17 without a debt ceiling hike.

Treasury Secretary Jacob Lew told House of Representatives Speaker John Boehner in a letter that the partial shutdown of the government, which began on Tuesday due to lack of a budget, would not materially change the projections he made last week for when the Treasury would hit its limit.

Although the lack of a budget for the new fiscal year "creates some additional uncertainty", it would not change the Treasury's position unless the impasse continues "for an extended time".

Lew warned again that not increasing the debt ceiling by October 17 would force the US government to default on its obligations - though he did not specify which of those obligations it would likely fail to pay.

"Not later that October 17," he said, "we will be left to meet our country's commitments at that time with only $US30 billion ($A32 billion)."

News that makes sense

Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.

By subscribing, you agree to SBS’s terms of service and privacy policy including receiving email updates from SBS.

"This amount would be far short of net expenditures on certain days, which can be as high as $US60 billion ($A64 billion)," he added.

Congressional Republicans have refused both to pass a budget for the fiscal year which began on Tuesday, and to raise the $US16.7 trillion ($A17.8 trillion) debt ceiling, as they push for political and fiscal concessions.

The country is running a deficit of about $US60 billion ($A64 billion) a month and needs to raise that much from lenders to finance its deficit.

The Treasury has been able to operate just under the ceiling since May using "extraordinary measures" to adjust its accounts and continue to pay the country's bills, from salaries and pensions to servicing debt.

But Lew says those measures have been exhausted, and new borrowing will be required by October 17, or some bills - or the debt - will go unpaid.


Get SBS News straight to your inbox

Sign up now for daily news from Australia and around the world. You can also subscribe to Insight's weekly newsletter for in-depth features and first-person stories.

By subscribing, you agree to SBS’s terms of service and privacy policy including receiving email updates from SBS.

Follow SBS News

Download our apps

Listen to our podcasts

Get the latest with our News podcasts on your favourite podcast apps.

Watch on SBS

SBS World News

Take a global view with Australia's most comprehensive world news service

Stream now

Watch the latest news videos from Australia and across the world