Government likely to exhaust debt-ceiling options soon

Discussion in 'Financial Cents' started by tulianr, Feb 4, 2014.

  1. tulianr

    tulianr Don Quixote de la Monkey

    By Jia Lynn Yang, Published: February 3

    Treasury Secretary Jack Lew urged Congress on Monday to act quickly to raise the federal debt limit, saying he will run short of cash to pay the nation’s bills by the end of the month without additional borrowing authority.

    “Unlike other recent periods when we have had to use extraordinary measures to continue financing the government, this time these measures will give us only a brief span of time,” Lew said in a speech at the Bipartisan Policy Center.

    Congress temporarily suspended the debt limit in October as part of a deal to reopen the government after a 16-day shutdown. On Friday, the limit will go back into force at the current level of U.S. indebtedness, which stood Monday at just under $17.3 trillion.

    At that point, Lew said, Treasury will start taking “extraordinary measures” to conserve cash. Those measures are a well-worn set of tools, but they will not buy Treasury nearly as much time as in previous standoffs.

    There are two powerful “extraordinary measures.” The first, which is available, is through the federal employees’ retirement investments, known as the G Fund because it holds government bonds. The government can temporarily reduce how much debt is held by the fund, which gives it more room to borrow within the debt limit.

    The second measure, which is not available, is making new investments to the civil-service disability and retirement fund, which the government uses to pay out civil service pensions.

    In its latest analysis, the Bipartisan Policy Center (BPC) projects that the government will reach the point where it can no longer meet all of its obligations sometime between Feb. 28 and March 25.

    As soon as March 14, according to the BPC’s analysis, the government could be within $5 billion of default — “even under a very optimistic scenario.”
    Government likely to exhaust debt-ceiling options soon, Lew warns - The Washington Post
  2. Yard Dart

    Yard Dart Vigilant Monkey Moderator

    Crashing the economy.... coming to a town near you soon, stay tuned....[micro]
    tulianr likes this.
  3. DarkLight

    DarkLight Live Long and Prosper - On Hiatus

    If only we had some historical precedent to look to, something that would give us any indication that it's going to be all right. If only this had happened before and we knew what to expect. :rolleyes:

    Prepare for the worst. Hope for the best. Practice your stretches so you can BO(HICA).
  4. ghrit

    ghrit Bad company Administrator Founding Member

    Fine and dandy that dot gov makes "investments" that should return something in the way of a gain. However, I have yet to see a true investment made. All that I see is gifts to someone for some future, maybe, purpose. All we hear in this hobby is ditch your debt first, then provide for the future with unencumbered frns or other assets. So, I have to ask, what makes dot gov wiser to spend rather than reduce debt?

    It galls me no end when certain words get thrown around without full understanding of what they mean. "Investment" is one, "profit" is another, both whenever used by progressive politicians.
    oldawg, tulianr, gunbunny and 2 others like this.
survivalmonkey SSL seal warrant canary