US has room to move on debt deadline

Strong tax receipts mean the United States will have up to two extra weeks after the August 2 target date before it could be forced to default on obligations, analysts said Tuesday. The US Treasury has said repeatedly the August 2 is when its spending commitments will definitely outpace receipts, unless the country's borrowing ceiling is raised by then. On Monday night President Barack Obama repeated the date, urging Congress to raise the ceiling to avoid forcing the country to renege on its debts. But economists studying the actual pace of cash inflows into the government say there is room to move. Wrightson ICAP said they think August 15 is "the critical deadline from a cash-flow perspective." "It still looks as though they'll have enough cash in August to fund operations into the second week of the month," their chief economist Lou Crandall said. Barclays Capital Research puts the do-or-die date at August 10. "It now appears that tax receipt inflows from July 14 to date have been considerably stronger than we were expecting," Barclays analysts said last week. Barclays said that Treasury collections in the July 14-19 period were about $14 billion higher than originally forecast. At that pace, the government could continue to operate normally for another week or more. While there is much talk of a looming default on debt, the markets have indicated the government should have no problem rolling over existing debt in the next few weeks. The government will first feel the pressure to cut spending on regular operations from August 2, or whenever the crunch comes. Rising obligations to make other payments will cause a squeeze -- on everything from government salaries, contractor payments, to longstanding social security and health care obligations. If more money is coming in than originally projected, Washington might not have to make those cuts right away. But a huge debt hurdle looms on August 15: the Treasury has to make a $30 billion payment of interest on long-term bonds. No one has suggested that the pace of receipts will enable it to finesse that without other spending cuts. "You can still go beyond August 2 -- I think that's put out there as a D-Day, this deadline day, but it's not really," Jeff Cleveland of investment bank Payden & Rygel told NPR radio's Marketplace program Tuesday. "It's not until you get to that August 15 point where you have make that payment. That's a large chunk of money."