ABC News' Dan Arnall reports:
The Treasury issued another warning to Congress today – pass a debt ceiling increase before May 16th or the Federal government will be running on fumes.
In a letter from Secretary Geithner to Congressional leaders of both parties, the Secretary says that the May 16th deadline mentioned in an April letter is still the date certain for Uncle Sam busting through his Congressionally mandated credit limit of $14.3 trillion.
He also reiterated the “catastrophic economic impact that would be felt by every American” should the Congress not act to expand the government’s ability to borrow.
“In my last letter, I described in detail the set of extraordinary measures Treasury is prepared to take in order to extend temporarily our ability to meet the Nation’s obligations if an increase is not enacted by May 16, when we estimate the limit will be reached,” wrote Geithner. “Because it appears that Congress will not act by May 16, it will be necessary for the Treasury to begin implementing these extraordinary measures this week.”
According to the letter, officials in the Treasury Department will stop issuing State and Local Government Series (SLGS) Treasury securities on Friday. Those bonds help states and cities fund infrastructure improvements. While the end user for this debt is not the Federal government, the bonds count against the Congressionally approved debt limit.
Geithner also provided details on the next set of extraordinary steps the Treasury will undertake to keep the Federal government under its credit limit.
Starting on May 16, he says the Treasury will tap into several civil service retirement funds to keep the government functioning. Under existing law, any depletion these funds suffer under the emergency actions will have to be replaced once the debt limit is raised by Congress.
Using these actions will stretch the Treasury’s ability to fund government operations until “… about August 2, 2001, approximately three weeks later than was forecast last month.”
Earlier today the Treasury Department issued details of its Quarterly Refunding needs, saying it will need to borrow some $142 billion in the second quarter which ends in June. That’s lower than the original estimates thanks to higher tax receipts and lower spending. Today’s report also said that the Treasury will need to issue $405 billion in the third quarter to continue government operations.
Read full Geithner letter HERE
Read Treasury Borrowing Estimates HERE.