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Debt Limit to Hit Sooner Than Expected

1 min readBy: Andrew Lundeen

Treasury Secretary Jack Lew informed Congress today that the government could run out of funds as soon as the middle of October.

According to the letter, once the United States government exhausts its “extraordinary measures” the U.S. Treasury will have $50 billion in cash on hand to pay its bills.

Some speculate that policymakers may tie together the debt ceiling debate and taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform as an opportunity to create a “Grand Bargain.” Doing so may pose its own risks, as tax reform could quickly become a discussion about more tax revenues, as Senate Leader Harry Reid (D-NV) has suggested, instead of increasing economic growth and creating jobs.

Congress extended the debt ceiling for three months at the beginning of the year, and the debt ceiling hit its limit of $16.699 trillion in May. Without action, the Treasury may lack funds to keep the governemnt running.

The last major debt ceiling debate took place in the summer of 2011, after which the U.S. received a credit downgrade.