28 Aug 2013

US govt tipped to run out of money in October

6:06 am on 28 August 2013

US Treasury Secretary Jack Lew has told Congress the government will run out of money to pay its bills by the middle of October unless the federal debt limit is raised.

The debt ceiling was last raised in January. The government can no longer borrow if it is reached.

In a letter to House Speaker John Boehner, Mr Lew said that in such a case the government will be unable to meet obligations such as pensions, military salaries and Medicare payments.

The BBC reports the borrowing limit for the United States is currently capped at $US16.7 trillion.

''Treasury would be left to fund the government with only the cash we have on hand on any given day," he said.

The BBC reports the cash balance at that time is forecast to be about $US50 billion, which Mr Lew said, would be "insufficient to cover net expenditures for an extended period".

In the letter Mr Lew said that a delay in raising the limit "would cause irreparable harm to the American economy".