According to cnsnews.com, the U.S. Treasury Department’s Financial Management Service (FMS), is reporting in its Monthly Treasury Statement, that the federal government ran a deficit of $98 billion in the month of July. FMS reported, however, that despite this deficit, the government’s debt remained exactly $16,699,396,000,000 for the month.
The unchanged debt was reported in the Daily Treasury Statements which show the daily value of the federal government debt that is subject Congress’ legal debt limits. The number $16,699,396,000,000 is just $25 million below the legal limit that was set in a bill passed by Congress and put into law by President Obama.
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Had the Treasury reported the $98 billion deficit in the Daily Treasury Statements instead of in the Monthly Treasury Statement for July, then they would have had to concede that the government has gone over the legal debt limit and had violated the law by continuing to borrow money.
Back in May, immediately after the Treasury reported the debt had hit $16,699,396,000,000, Treasury Secretary Lew sent a letter to Speaker of the House John Boehner that said he was going to implement “the standard set of extraordinary measures” to prevent the Treasury from surpassing the legal debt limit. The debt has remained unchanged since this letter was sent – 87 straight days.
If Secretary Lew is unable to continue with these “extraordinary measures,” then the government is going to have a debt-limit crisis based on the actual amount of money being borrowed monthly. There are no guesses as to what effect this may have on the economy, but a rise in inflation seems likely.