The United States federal government could default on its obligations and debt “very soon,” the Obama administration warned Monday. The U.S. is near the part where the government runs out of room to borrow money under a legal cap on the public debt.
It’s pretty much a repeat of nearly every single year in this administration.
Treasury Secretary Jack Lew confirmed that the U.S. is going to reinstate a debt limit at the end of the week and the administration can utilize accounting schemes to stay under the new cap until the end of this month. Once those methods are completed then the government would spend its remaining reserves rather quickly because at this time of the year it’s short on cash due to tax refunds.
“Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government,” Lew stated in a speech delivered to a think-tank organization.
Speaking at a Bipartisan Policy Center event, Lew explained that it’s uncertain if the government should address its long-term fiscal picture because it has taken positive actions on the reduction of the budget deficit.
“I’m not sure this is the year for the long-term fiscal challenge to be dealt with,” said Lew. I actually believe that we’ve made so much progress in the short and medium term, we have a little time to deal with the longer term.”
Without borrowing money to pay its debts and obligations, it could miss Social Security payments and other monthly checks for various entitlement programs. According to some experts, if the U.S. were to default then it could initiate domestic and international financial panic and even a collapse of the national and global economies.
The national debt is more than $17 trillion, but some economists say that figure is more likely to be between $70 and $200 trillion if you account for unfunded liabilities and expenditures.
Whether or not the U.S. gets through this year’s financial ordeal, it’s inevitable that the U.S. government will either destroy the dollar to pay for its debt or default entirely.