(National Sentinel)Â Government: After Congress returns from its month-long recess in August, lawmakers face a dire emergency: The Treasury will run out of funds less than a month later, which could cause massive defaults or, at a minimum, payment delays.
As reported by theÂ Washington Free Beacon, Uncle Sam will run out of cash in the next three months, or maybe sooner if spending ramps up and/or revenues fall more than expected, quoting from a Congressional Budget Office report:
On March 15, 2017, the suspension of the debt limit expired and since then the Treasury has been able to borrow additional funds without violating the debt ceiling.
But, “theÂ Congressional Budget Office projects that if the debt limit remains unchanged, those measures will be exhausted and the Treasury will most likely run out of cash in early to mid-October,” the report states. “The government would then be unable to pay its obligations fully, so it would have to delay making payments for its programs and activities, default on its debt obligations, or both.”
Currently, the federal deficit stands at $693 billion, which is an increase of $134 billion than what it projected in January. The federal government has an outstanding debt of $19.8 trillion, which includes $14.3 trillion in public debt and $5.5 trillion held by government accounts.
Spending on major government programs such as Social Security and Medicare causes the amount of borrowing to increase. For example, payments to Medicare Advantage and Medicare Part D plans will total $23 billion, spending on Social Security benefits will total roughly $23 billion and funds for active-duty military and recipients of Supplemental Security Income will total roughly $25 billion.
According to the report, unless the debt limit is raised, the Treasury will not be able to issue additional debt.
“That restriction would ultimately lead to delays of payments for government programs and activities, a default on the government’s debt obligations, or both,” the CBO noted further in its report. “CBO estimates that without an increase in the debt limit, the Treasury, by using all available extraordinary measures, would most likely be able to continue borrowing and have sufficient cash to make its unusual payments until early to mid-October of this year.”
It’s not a popular subject in Congress, but at some point the country really will reach itsÂ true debt limit — that is, the amount of debt being carried and serviced annually with tax revenues will have economically unsustainable, barringÂ major taxÂ and revenue increases.
Believe it or not, the massive debt successive congresses and presidents have amassed (the debt doubled under George W. Bush to about $10 trillion, then doubled again under Barack H. Obama to nearly $20 trillion) is a national security issue. God forbid, but should we find ourselves in another major world war, the amount of borrowing that will be required to fund it with expensive weaponry and massive troop buildups will bring us much more quickly to our financial break point.
President Donald J. Trump has pledged to bring down the national debt and his first budget proposal reflects his will to substantially cut spending – and it was pronounced dead on arrival by the spendthrift Congress.
That said, here’s another fun fact: Without substantial reductions/reforms in mandatory spending – that would be the ever-growing federal entitlement programs and interest on the massive (and growing) debtÂ – this spending-to-debt problem willÂ neverÂ be solved, which means, eventually, a default is a certainty.