The U.S. government’s debt has been locked in at this implausible limit for three months: $16,699,396,000,000.
The Secretary of the Treasury says that it will not hit the ceiling until mid-October. The BBC reports this.
The country’s borrowing limit is currently capped at $16.7tn (£10.7tn).
“Extraordinary measures are projected to be exhausted in the middle of October,” Mr Lew said in a letter to House Speaker John Boehner and other lawmakers.
“At that point, the US will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day,” he said.
The cash balance at that time is forecast to be about $50bn, which Mr Lew said, would be “insufficient to cover net expenditures for an extended period”.
He said: “Operating the government with no borrowing authority, and with only the cash on had on a given day, would place the United States in an unacceptable position.”
This warning is silly. The U.S. government has obviously been over the limit ever since late May. The world knows this.
On August 14, the Cybercast News Service (CNS) ran this story.
(CNSNews.com) – The Treasury Department’s Financial Management Service (FMS), which publishes both the federal government’s official Daily Treasury Statement and its official Monthly Treasury Statement, is reporting that in July the federal government ran a deficit of $98 billion but that the federal government’s debt remained exactly $16,699,396,000,000 for the entire month.
The FMS said that the deficit went up $98 billion ($97,594,000,000) in the Monthly Treasury Statment for July, which it released on Monday.
At the same time, the FMS said the debt stayed at exactly $16,699,396,000,000 in its Daily Treasury Statements, which are published every business day. The Daily Treasury Statements show the daily value of the federal government debt that is subject to a legal limit set by Congress.
At the static $16,699,396,000,000 level that the Treasury reported for every day of July, the debt was just $25 million below the legal limit of $16,699,421,000,000 that was set in a law passed by Congress and signed by President Barack Obama.
If Treasury’s daily statements were to declare that the government had borrowed an additional net $98 billion to cover the $98 billion deficit the Treasury declared in its monthly statement for July, the Treasury would be conceding that the government had already surpassed the legal limit on the debt–and has been violating the law by continuing to borrowing additional money.
Instead, even as the Treasury was running up the $98-billion deficit it reported in the July Monthly Treasury Statement, every one of the 22 Daily Treasury Statements published for July said the Treasury had closed out the previous business day with exactly $16,699,396,000,000 in debt.
The Daily Treasury Statement for Aug. 12, released Tuesday afternoon, says the debt remained stuck at exactly $16,699,396,000,000 during the first 12 days of this month, too.
On May 17, the first day the Treasury reported that the debt had hit exactly $16,699,396,000,000–and was thus just $25 million below the legal limit–Treasury Secretary Lew sent a letter to House Speaker John Boehner saying he was beginning to implement what he called “the standard set of extraordinary measures” to prevent the Treasury from exceeding the legal limit on the federal debt.
Since Lew sent that letter–announcing that he would use “extraordinary measures”–the debt has remained stuck at exactly $16,699,396,000,000 for 87 straight days.
That includes all 31 days in July when Lew’s Treasury says it was running a $98 billion deficit.
When Lew stops using “extraordinary measures” to keep the debt at exactly $16,699,396,000,000, the government will have another debt-limit crisis.
There is no way that the debt simply stopped growing. There is no good reason why the government cannot report this same figure from now on. If the government can legally cook the books from May 17 until today, and promises to cook them until mid-October, and no one in Congress asks how, then why not for two more months, two more years, or forever? Congress merely needs to ignore the cooking process. It already has. Why not indefinitely?
The bond market does not care. The stock market does not care. The fact that the book-cooking has gone on for three months, and this is no longer mentioned by the mainstream media, is evidence that nobody in Washington or Wall Street cares.
Cooked books? No problem. Bernanke’s taper in September, for which there is no evidence? Let’s focus on that! Let’s ignore reality and concentrate on make-believe!
This is the home of the brave and the land of the free. The gentlemen’s agreement has lasted for three months. Why not forever? All Congress has to do is sit tight and play pretend. The capital markets don’t care. The pundits don’t care. The mainstream media don’t care. Helen Thomas might have said something, but she’s dead. The opinion makers are amused. “What will the Treasury Department do next? How long can Lew keep this going?”
I imagine that there are office pools at the Wall Street Journal and CNBC on the next announced deadline.