Retirees, military officers and federal workers who don't like to get caught up in politics might suddenly have a reason to care. Congress has until early November to compromise on raising the debt ceiling, or they might not get paid.
Since March, the U.S. Treasury has been using extraordinary measures to stay under the borrowing threshold, waiting for lawmakers to increase it. The debt limit needs to be lifted by Nov. 3, two days earlier than previously estimated, Treasury Secretary Jacob J. Lew warned Thursday. After that, the Treasury will be left with less than $30 billion of cash on hand, he said.
Analysts at the Bipartisan Policy Center in Washington and Jefferies Group LLC in New York estimated in a report Wednesday, before Lew's latest projection, that as early as Nov. 10 the Treasury's account might run completely dry. Then, incoming revenue will be enough to cover about 69 percent of the government's expenses, according to the Bipartisan Policy Center.
The largest outlays include payments of about $14 billion each for Social Security on Nov. 10, 18 and 25; $2.7 billion in military pay on Nov. 16; and a total of $4.7 billion in federal salaries on Nov. 20 and 23. The Treasury might have to prioritize, paying only some bills on time, the center said.
The debt limit has already impacted the financial markets, as the Treasury lowered the supply of some short-term securities to stay under the threshold.
The latest sale of the four-week bills came with a minor glitch which caused the delay in the results and triggered investors' concerns about the future auctions.
"Things are going to get hairy around this debt ceiling," said Thomas Simons, a Jefferies government-debt economist in New York.