When Will U.S. Actually Run Out of Time on the Debt Ceiling?

Nobody knows for sure. But here are some best guesses

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CNN Newsource

With the government shutdown more than a week old and no resolution to the standoff in sight, economy-watchers are turning their attention to the debt limit, which the Treasury Department has estimated we will breach sometime after October 17h.

That’s the date when Treasury Secretary Jack Lew has said his Department will have exhausted the “extraordinary measures” it has taken to extend the U.S. government’s borrowing ability without technically going over the debt limit. After the 17th, Lew has said, the Treasury Department will have just $30 billion in cash on hand, which Lew has told Congress is “far short of net expenditures on certain days, which can be as high as $60 billion.”

So when exactly will the country run out of time in the debt ceiling crisis?

Lew’s language leaves wiggle room as to the exact date when the Treasury Department’s funds would be insufficient to meet its obligations. While the vast majority of market analysts believe a U.S. default would be catastrophic for the world economy, there’s not a lot of consensus on the exact date when that catastrophe would take place.

(MORETwitter’s Brilliantly Short ‘Letter to Shareholders’)

Many believe that we won’t wake up on October 18th to worldwide financial panic, that the government could probably limp along for a few more days and possibly to the end of the month before things get really bad. “A true capital D default is very unlikely to happen on October 18th,” writes Chris Kreuger, an analyst at Guggenheim Partners in a research note. He argues that since the Treasury Department has few large payments due before November 1, it’s likely that we could actually get along without missing payments and triggering a default scenario. Kreuger stresses, however, that this is just speculation. “We don’t want to sound too optimistic about a post-October 17 world. The short answer is that no one quite knows what would happen,” if we reach that date without raising the debt ceiling.

Economists at JPMorgan have been more precise, estimating that the Treasury will run out of cash on the 24th—one week after Treasury says it’s extraordinary measures will be exhausted. They write that it is “extremely unlikely” the Treasury will be able to make its payments more than a few days after the 24th, and that the Treasury would most certainly have to default on some payments by November 1st, when large outlays for Social Security, Medicare, retirement benefits for military and civil services workers, and interest payments are due.

The Bipartisan Policy Center echoes this view. In an updated analysis published this morning, it estimates that the “X date” defined as “the date on which the United States will be unable to meet all of its financial obligations in full and on time,” will come between October 22nd and November 1st. Analysts from Bank of America and Goldman Sachs also support the view that while the Treasury may be able to limp along during the second half of October, it’s highly unlikely the U.S. would avoid default without the debt ceiling being raised before November 1st.

25 comments
DrewGillett
DrewGillett

Let's get some facts straight: The Democrats in the Senate are sitting on bills to raise the debt limit and reopen the government.  They just refuse to pass them, because that would mean harming the ACA, and they've decided they'd rather default on the debt and keep the government closed than do what they refused to do in 2009-10 and actually hammer out a bi-partisan solution to the country's healthcare problems. 

And that partisanship back then has triggered this partisan battle now, because the Democrats never wanted to then and still don't want to negotiate solutions to the nation's problems.  Unfortunately, this was an event that was highly likely going to happen the minute Obama, Pelosi, and Reid decided to pass the ACA into law without a single GOP vote, and not paying attention to public sentiment about it at the time and even when the ultra-liberal state of Massachusetts elected a GOP senator to fill Ted Kennedy's seat in order to stop the horrid thing.  Eventually, the GOP was going to have to make sure they were allowed at the bargaining table, and Obama and Reid are so arrogant they refuse to.  The problem is summed up by Obama's words about the GOP after they took back the House:

"They need to sit at the back of the bus."

This is what happens when arrogant people are elected into power and have no consideration except for their political and policy goals, and with no consideration of what is best for the country or what the people want.  The words of Obama and Reid,

"We won't negotiate"

is how they put through the ACA and why this disaster is taking place.  This brash, partisan arrogance is the source of this entire mess.  Obama said during his reelection campaign he would reach across the aisle the next time, as he said he would do the first time, but instead it is the opposite,

"I refuse to negotiate."

Well, that is precisely why we're here.  We're here because from the very beginning, the rash arrogance of the Democrats and Obama has caused those being told to "sit at the back of the bus" to finally refuse, and rather than doing now through delay and reworking the ACA, which is what what they should have done from the beginning by hammering out a bipartisan solution to the healthcare problems in the US, they've chosen an attitude of "ACA or default" methodology.  And the Democrats may just get what they're after.

PanDawarrior
PanDawarrior

More fear mongering.  Why do we even need to pay interest to ourselves?  Foreigners own about $5 trillion, which interest needs to be paid on.  However, the remainder of interest payments on US debt is US held in various forms.  Ok, so you have some minor non-interest payments you have to make, but they pale in comparison.  I just don't buy the whole we are going to default.  We aren't going to default on the foreign interest payments, and why the heck do we need to let the Fed make any money?  The banks and investment groups who bought near interest free money from the USG and then bought higher interest paying treasuries and made tons of money doing so don't need to be paid either.  Just send out granny's social security checks and pay the foreigners their interest payments and we can continue to print more fake money to buy for ourselves and be done with it.

constantfisherman
constantfisherman

I am fairly apolitical and find it hard to attach blame to either party. In my 2 cent opinion, they have both failed. However, by "hiring" them to run our country; none of them should collect a paycheck until this present dilemma is resolved. I don't get paid-they shouldn't get paid.

PudgysHuman
PudgysHuman

The Republicans played this one well. Shut down the government using the guise of opposing something they (well the CHF) actually came up with - The Affordable Healthcare Act even though it's been voted on 43 times and upheld in the Supreme Court. At the same time, they hit the debt ceiling - as directed by the wealthy corporations who told them to do so. Sell high, buy low. US and world stock markets will crash. These corporations will replenish all the money they lost investing in a poor attempt to win Romney the Presidential ticket. And the best part - we can all blame Obama. So sad that some of the American public will buy into it. 

JohnSanJuan
JohnSanJuan

How come if the government didn't raise the limit over $16.7 trillion? We are in financial trouble. Mr. Boehner is the worst politician in US history!

Kalyan
Kalyan

It is funny that the biggest economy with their million-dollar paid economists can not even put a date when they would run out of their stock. Even my 85 year old granny does it always correctly while ordering her grocery stocks every month

macrubyrails.guru
macrubyrails.guru

It doesn't really matter. Default or no default, stocks are going down.  People are not going to wait until the news is released before they sell.  They are selling now.  You should too!!

lefty_OEB
lefty_OEB

Anyone willing to stand on their high horse and blame the republican or democratic party while believing that their side is not just as responsible is a fool. Democrat or Republican, you're all to blame. Stop following the crowd of a political group who really could not care less about you, and start thinking for yourself. Whether its Bush or Obama, the end result is the same = waste and America looking foolish to the rest of the world. The problem begins when you believe that you and your party have all the answers. Arrogance, stalemate, shutdown.

hilarow
hilarow

"one week after Treasury says it’s extraordinary measures will be exhausted. "

"They write that it is “extremely unlikely” the Treasury will be able to make it’s payments more than a few days after the 24th"

http://www.its-not-its.info/

Please EDIT.

canadian11
canadian11

Looking as your neighbor: you look like terrorists wrecking your own country and the economy of other countries who do you think you are you arrogant bunch of terrorists 

rxonmymind
rxonmymind

What is it about the Republican party and their fetish with financial disaster? 2008 wasn't enough?

AdamSmith
AdamSmith

the same Tea Party types who are so sure the government can't handle Enrollment for Obamacare in a year are certain that the government can reprogram writing 80 million checks a month, in 2 weeks.

thetexasprophet
thetexasprophet

The GOP has truly drunk the crazy KoolAid. The markets are going to drop like rocks if the debt ceiling isn't raised by Oct. 17.


Maybe it will take a severe drop the economy to break the GOP out of its self induced stupor. Who knows.

ChasHolman
ChasHolman

The truth takes few words.. The GOP has gone over the edge into insanity.


Only ONE party has the ability to open Government this minute if they WANT TO. And it isn't the Democrats.

Pride goeth before a fall, too bad they will drag us all down with them, and others who once called themselves patriots, will cheer the self inflicted Republican wound to the nation.

DrewGillett
DrewGillett

@PudgysHuman Now this is one of those stupid comments made by a typically ignorant Liberal.  The truth is, the people who most want this resolved are the wealthy corporations, and they want the Democrats to win. The wealthy corporations, thanks to Obama, are all exempt and don't have to suffer the pain of the ACA.  Neither do his political friends in the government, thanks to huge subsidies they get to pay for non-ACA health plans.  Who does have to suffer? The middle-class and poor.  

The fact is, this debacle was triggered by Obama and the Democrats when they chose in 2009-10 to force through the ACA without coming to the table with the GOP.  By not making it a bi-partisan measure, they created this inevitable confrontation.  It reeks of arrogance and dishonesty to blame the GOP for standing their ground against a purely partisan bill passed by the wanna-be tyrant Obama and his underlings.

DrewGillett
DrewGillett

@JohnSanJuan Just so you know, Boehner and the GOP in the House have passed bills to both reopen the government and raise the debt ceiling.  It is Reid and Obama, together with the Democrats in the Senate, who are choosing to keep them from being passed and signed into law.  If there is a default, it will have been triggered by the Democrats who are being obstructionists and not allowing the ceiling to be raised because they don't like the terms.  This is the craziness of the Democrats and the media, who don't even understand how the government works.

justinba1010
justinba1010

@Kalyan Medicare and Social Security aren't anything like eggs, milk, and bread.

DrewGillett
DrewGillett

@lefty_OEB You're right in most circumstances.  Except in this one, this is the result of pure partisan politics by the Democrats in 2009-10 who would not include the GOP in the creation of the ACA, mostly because they couldn't even hold the Democrats together on it.  And given all the exemptions Obama gave the rich corporations and allowed prior exemptions for Congress to stay in place, Obama and the Democrats triggered this confrontation.  They basically tried to do a massive power grab and now are going to lose the country and all its power in the process.  Obama is the opposite type of politician from guys like Bill Clinton and George W. Bush, who never sought any major piece of legislation with at least some clear bi-partisan backing, and who when they lost one or both houses to the other side, came to their senses and started working across the aisle.  "I won't negotiate" is not something any prior President or Congressional Leadership has ever tried before, and that's what is triggering this damned thing.

justinba1010
justinba1010

@lefty_OEB I blame floods on excess rain don't I? I'll blame the party that made their platform into taking the government ransom to defund Obamacare.

DrewGillett
DrewGillett

@rxonmymind 2008 was triggered by loans that were given to people with bad credit to purchase homes, and then hidden by Fannie and Freddie.  This policy was allowed through an Executive Order of Bill Clinton in 1999 and left dead until Obama, Frank, and Pelosi revived in in 2005, using the threat of civil rights lawsuits for discrimination by Freddie and Fannie because they were not doing what was necessary to increase minority home ownership.  That was the evolution and trigger of "stated income loans" as they are now called, which triggered the 2008 credit collapse.  Luckily, the Liberal-owned media misreported the story and blamed Bush, so Obama and the Democrat's part in it was never brought forth, and shouting "It's Bush's fault!" was all that was needed as long as it kept being repeated.  

Kind of like after Katrina, when the reason Bush didn't act as fast as he did was because procedure required that the state's governor request Federal help, and the governor of Louisiana, who didn't like Bush, refused to request help.  This fact was missed and Bush was turned into the guilty party, when in fact it was the Democrat governor of Louisiana.  

Oh well, if you drink the Kool Aid, no one can help you.

DrewGillett
DrewGillett

@AdamSmith This is not the TEA Party's doing.  This is Harry Reid and Obama's doing.  The House has already passed measures to both reopen the government and raise the debt ceiling.  But the cry babies in the Senate and the White House have decided they would rather trigger a default than have to step back and listen to the other side of the aisle that was elected by the same folks who voted for a good portion of their constituency.  It's a selfish, arrogant game the Left is playing.

DrewGillett
DrewGillett

@thetexasprophet The debt ceiling could be raised right now.  It just requires Harry Reid and Obama passing into law what the House has already sent over.  The craziness is that the Democrats are so drunk with power that they would rather trigger a default than listen to public sentiment and put the pause button on Obamacare.

DrewGillett
DrewGillett

@ChasHolman Since the House has sent over bills to reopen the government to the Senate, as well as to raise the debt ceiling, you are incorrect.  The Senate and Obama - the Democrats - could at this moment pass those bills and sign them into law, but they prefer default to not getting their way.  So who is crazy?  The Democrats, not the GOP.

AdamSmith
AdamSmith

@DrewGillett @AdamSmith  

Nobody believes that, you don't really believe that.

"The House has already passed measures to both reopen the government and raise the debt ceiling."

With impossible, UNRELATED conditions.

The SENATE already passed CLEAN measures for both.

Suppose the Senate added a new higher tax rate to THEIR version. I'm sure the Republicans would have NEGOTIATED that, right?

But the real problem is that Boehner could have opened the government at any time in the last week, just by allowing a vote on a clean CR. The votes were there, two dozen Republican Congressmen said they would vote for it.

Again, no one believes you. The American people know better, 70% of them didn't want the government shut down over funding for Obamacare, and approval ratings for the Republicans have hit all time lows.

Delude yourself all you want, it's not going to help. The Republicans are going to reap the whirlwind in 2014.