Washington, December 1, 2008 : If Congress fails to raise the debt limit by December 31, the US Treasury Department will run out of cash most likely before December 31, the nonpartisan Congressional Budget Office, (CBO), has stated.The US Treasury has already exceeded the new debt limit at $28.9 trillion.Therefore, it has no room to borrow according to its standard operating procedures.
On Tuesday, the Federal agency reported that the department is using “extraordinary measures” to continue borrowing additional amounts for a limited period.
The CBO estimated that if the debt limit was not increased and the US Treasury transferred $118 million to the Highway Trust Fund on Dec 15, as planned, the Treasury would run out of cash by December 31st.
The Federal agency stated that if this happened, the government would not be able to fully pay its obligations and would delay making payments for certain activities, default on its debt obligations or both.
According to Xinhua news agency, the CBO’s projection was made as Janet Yellen, US Treasury Secretary, urged Congress to increase the debt limit by December 15,
“I cannot emphasize how important it is for Congress to address this issue.America must pay its bills in full and on time.”If we don’t, we will eviscerate the current recovery,” Yellen stated Tuesday before Senate Banking Committee.
“I didn’t say that there is no possibility that we can make this past December 15.there’s uncertainty about where we will end up on December 15, and there are scenarios that would indicate that it would be impossible to finance the government,” Yellen said.
She stated that Congress should recognize that it may not be possible to quickly raise the debt ceiling.
The debt limit, also known as the debt ceiling, is the maximum amount of money the US government can borrow to meet its legal obligations.
This includes social security and medicare benefits and interest on the national debt.
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