Treasury Secretary Jack Lew drew an official deadline of Oct. 17 for Congress to raise the nation’s debt ceiling, after which he said the Treasury would not be able to meet all of its obligations.
Lew sent another letter to Congressional leaders on Wednesday — a follow-up to a late-August letter that warned of possible default in mid-October.
After Oct. 17, Lew said, the Treasury would have only approximately $US30 billion to meet all of its commitments. On some days, expenditures can go as high as $US60 billion.
“If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history,” Lew wrote in the letter.
Analysts have begun to sound the alarm over the possibility of a default. Chris Krueger, a D.C.-based analyst for Guggenheim Partners LLC, wrote in a market commentary Wednesday that there is a 40% chance of “technical default scenarios” as a result of the looming fight over raising the debt ceiling. What’s more — the 60% chance Krueger sees of no default is based on nothing more than “blind faith,” he wrote.
The full letter is embedded below:
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