The Congressional Budget Office released a report Wednesday backing Treasury Secretary Jack Lew’s claims that Congress has until early November to address the debt limit before the country is unable to meet its financial obligations.
The nonpartisan scorekeeper initially predicted the U.S. Treasury would hit its legal limit around late-November or early-December if the ceiling isn’t raised, but has since pushed up the deadline due to lower tax receipts and a larger-than-expected deficit seen in September.
If the debt limit — which currently stands at $18.1 trillion — remains unchanged, the country could see a delay in government payments, a default on its outstanding debts and a loss of its ability to borrow funds.
The Treasury hit its limit in March but has used a series of accounting maneuvers to avoid exceeding the cap.
“Because the Temporary Debt Limit Extension Act did not provide additional borrowing authority above the amount of debt that had already been issued as of March 15, the Treasury has no room to borrow under its standard operating procedures,” the report said. “To avoid breaching the limit, the Treasury has used extraordinary measures that allow it to continue to borrow for a limited period.”
The CBO’s estimates show that the extraordinary measures will be exhausted mid-November, and the nation’s cash balance will quickly deplete, leaving the country unable to pays its bills.
Leadership is scurrying to address the issue before the departure of House Speaker John Boehner.
“The speaker has made it clear that he wants to solve some outstanding issues before he leaves,” a source close to Boehner said. “No decisions have been made, but a resolution on the debt ceiling is certainly possible.”
Lew warned the implications of not raising the ceiling could have a disastrous effect on the global economy.
“There is no way to predict the catastrophic damage that default would have on our economy and global financial markets,” he wrote in a letter to the speaker.
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