Above, Boehner with the budget deal that keeps on printing;
October 15,
2015
The Honorable John A. Boehner
Speaker
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Speaker:
I am writing to follow up on my
previous letters regarding the debt limit and to provide additional information
regarding the Department of the Treasury’s ability to continue to finance the
government.
On October 1, I wrote to inform you
that the extraordinary measures we have been employing to preserve borrowing
capacity likely would be exhausted on or about Thursday, November 5.
The letter noted, however, that Treasury’s estimates are subject to
inherent variability and could change as we receive additional
information. It is impossible to forecast thousands of daily government
transactions with precision. The letter also noted that the trend in our
projected net resources had been negative in late September, which had reduced
the projected amount of time we could finance the government.
Accordingly, I cautioned that the ultimate date that Treasury exhausts
extraordinary measures could be sooner or later than November 5.
Over the past two weeks, Treasury has
continued to receive information about daily receipts, investments, and
expenditures. The trend in our projected net resources has continued to
be negative, and our projections for the relevant period have declined an
additional $4-6 billion. Based on our best and most recent information,
we now estimate that extraordinary measures will be exhausted no later than
Tuesday, November 3. At that point, we expect Treasury would be left with
less than $30 billion to meet all of the nation’s commitments—an amount far
short of net expenditures on certain days, which can be as high as $60 billion.
Operating the United States government
with no borrowing authority, and with only the cash on hand on a given day,
would be profoundly irresponsible. As I wrote previously, we anticipate
that a remaining cash balance of less than $30 billion would be depleted
quickly. In fact, we do not foresee any reasonable scenario in which it
would last for an extended period of time. The government makes
approximately 80 million payments a month, including Social Security and
veteran benefits, military salaries, Medicare reimbursements, and many
others. In the absence of congressional action, Treasury would be unable
to satisfy all of these obligations for the first time in the history of the
United States.
In recent letters, I also have
cautioned that Treasury’s cash balance already has fallen below a minimum
prudent level of $150 billion. Maintaining this minimum balance
helps protect against potential market interruptions, which in the past have
been caused by events such as Hurricane Sandy and the 9/11 terrorist
attacks. It does not increase the debt limit or alter the time we can
continue to pay the nation’s bills. Treasury’s cash balance is now
substantially below that minimum level.
The creditworthiness of the United
States is an essential component of our strength as a nation. Protecting
that strength is the sole responsibility of Congress, because only Congress can
extend the nation’s borrowing authority. Moreover, as you know,
increasing the debt limit does not authorize any new spending. It simply
allows Treasury to pay for expenditures Congress already has approved, in full
and on time.
For these reasons, I respectfully urge
Congress to take action as soon as possible, raise the debt limit without
delay, and remove an unnecessary threat to our economy. We have learned
from the past that failing to act until the last minute can cause serious harm
to business and consumer confidence, raise short-term borrowing costs for
taxpayers, and negatively impact the credit rating of the United States.
And there is no way to predict the irreparable damage that default would have
on global financial markets and the American people.
Sincerely,
Jacob J. Lew
Greg Hunter interviews Peter Schiff.
https://www.youtube.com/watch?v=_JZqdi6oKkY
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