US insolvent by October 17

The United States would exhaust its borrowing capacity no later than October 17, at which point it would have only about $30 billion (22.2 billion euros) in cash left, US Treasury Secretary Jack Lew revealed Wednesday.

In a letter to the US Congress, he urged lawmakers to swiftly increase the country's $16.7 trillion debt ceiling to avoid defaulting on its obligations.

"If the government should ultimately become unable to pay all of its bills, the results could be catastrophic," Lew warned.

The US administration is expected to reach its debt ceiling by October 1st unless congressional leaders agree on hiking the debt limit. However, the Republicans demand that any increase must result in spending cuts of an equal amount. President Barack Obama's Democrats want the debt ceiling increased without any conditions attached.

Lew warned Republicans that their plan to prioritize certain government payments over others would be simply default by another name.

In his letter, the US Treasury Secretary updated a previous estimate which had expected US borrowing capacity to exhaust later and with more cash left on hand for the government. The revision came after lower quarterly tax receipts and more information from government trust funds.

The last debt ceiling showdown in 2011 pushed the United States to within days of missing payments and led ratings agency Standard & Poor's to strip Washington of its triple-A credit rating.

uhe/mz (Reuters, AFP, AP)