Source: Bloomberg – Lew Presses Congress as U.S. Faces Oct. 17 Deadline
The U.S. has started using final extraordinary measures to avoid a breach of the nation’s debt limit, Treasury Secretary Jacob J. Lew said as he pressed Congress to increase borrowing authority “immediately.”
Lew, in a letter addressed to House Speaker John Boehner dated yesterday, repeated that the measures will be exhausted no later than Oct. 17.
When that happens, “we will be left to meet our country’s commitments at that time with only approximately $30 billion,” he said, “far short of net expenditures on certain days, which can be as high as $60 billion.”
Lew and President Barack Obama have said they won’t negotiate on the limit, which is tied to obligations the U.S. has already incurred. Boehner, an Ohio Republican, has issued a list of demands before he’ll support raising the ceiling. His conditions include approval of TransCanada Corp. (TRP)’s Keystone XL pipeline, major revisions to the tax code and a one-year delay of the insurance mandate in the Obama health-care law.
Pacific Investment Management Co.’s Bill Gross said the U.S. will avoid a “catastrophic” default on Treasury securities.
“The U.S. Treasury is the center of the global financial complex,” Gross, manager of the world’s biggest bond fund, said during a Bloomberg Television interview with Trish Regan and Adam Johnson. A default would be “unimaginable,” as it would have “catastrophic” consequences on U.S. borrowing costs, and would trigger a “complex series of events worldwide” that would ripple through global financial markets, he said.
For the first 11 months of the fiscal year 2013, which ended Sept. 30, the deficit was $755.3 billion, the narrowest for that period in five years, the Treasury said on Sept. 12.
The so-called extraordinary measures used by the Treasury are accounting maneuvers allowing the government to avoid breaching the $16.7 trillion debt ceiling. They include allowing the government to enter into a debt swap with the Federal Financing Bank and the Civil Service Retirement and Disability Fund.