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U.S. Department of the Treasury

Congress now has five weeks to raise debt limit before U.S. defaults

Gregory Korte
USA TODAY
In this July 23, 2015, file photo, Secretary of Treasury Jacob Lew testifies at a Senate Foreign Relations Committee hearing on Capitol Hill, in Washington.

WASHINGTON — The deadline for raising the debt limit is closer than we thought.

The Treasury Department said Thursday that the U.S. will reach the $18.1 trillion debt limit as soon as Nov. 5, at which point the government would run out of borrowed money and be forced into default.

That's several weeks earlier than previous estimates by the Congressional Budget Office, which had said the government would run out of money by November or early December.

But on Thursday, Treasury Secretary Jack Lew told Congress that September's tax receipts and required payments to military pension trust funds "were higher than projected — resulting in a net decrease of resources available to the United States government." Lew also noted that there's "inherent variability" in government finances, and that the actual deadline could be sooner or later than Nov. 5.

Lew's revised estimate comes the day after Congress passed a short-term spending bill keeping the government open until Dec. 11 in order to give Congress time to resolve spending and debt issues in one package. But the new. earlier deadline means that Congress would likely have to vote to raise the debt limit before an accord on spending.

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Treasury: U.S. cash balance drops below minimum

The national debt has, for all legal purposes, been frozen at the $18.1 trillion legal limit since March, when the Treasury Department began taking "extraordinary measures" to avoid taking on more debt. Those include freezing payments to some pension plans and drawing down reserve funds.

Those measures would run out as of Nov. 5, when Treasury estimates that the federal government would have only $30 billion in cash on hand. But daily outlays can exceed $60 billion on some days, providing little cushion if more money goes out than comes in. In that case, the U.S. would be forced to default, either on bond payments or other discretionary or mandatory spending.

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