Treasury warns U.S. government will run out of money by mid-October

The debt ceiling negotiations between President Obama, the Democratic leadership and Republican lawmakers are underway – again. Although GOP legislators are attempting to find some sort of a deal and Democrats are warning of a government shutdown, it will as usual come to a conclusion and both sides will just increase the debt.

Nevertheless, United States Treasury Secretary Jack Lew stated in a letter to Washington leaders, including House Speaker John Boehner, that the government will run out of money by Oct. 17 unless Congress raises the $16.7 trillion national debt limit. This is the first time that Lew has listed an exact date for when the U.S. would hit its limit.

“If Congress were to repeat that brinksmanship in 2013, it could inflict even greater harm on the economy,” wrote Lew. “And if the government should ultimately become unable to pay all of its bills, the result could be catastrophic.”

Texas Republican Senator Ted Cruz concluded a 21-hour speech against Obamacare, which the Republicans are attempting to defund through the budget measure. The White House has already confirmed that it will take part in discussions that would prevent a government shutdown just so long as the Keystone XL pipeline issue is not used in the bargaining process.

What’s interesting is that this political theater could be avoided if the U.S. government simply balanced its budget each year and trimmed the national debt. If the U.S. were to cut its spending – perhaps a plan similar to Ron Paul’s $1 trillion budget cut in the 2012 presidential campaign – the “catastrophic” result to the overall economy wouldn’t transpire in the first place.

Although the GOP is taking a step in the right direction of trying to defund Obamacare, its alternative isn’t any better. Described as GOPCare, Republican lawmakers and conservatives are promoting the concept of high-risk pools to create a “freer market healthcare system” (more can be read here on the proposal).

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