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Treasury Department stands by August 2 debt limit deadline
Treasury Secretary Timothy Geithner, second from left, makes remarks after a meeting with Democrats about the debt limit, Thursday, July 14, 2011.
(Credit: AP Photo/Evan Vucci)The Treasury Department pushed back on Wednesday against claims that the deadline for raising the debt ceiling could be pushed to as late as August 15, noting that the government could not guarantee its ability to pay its loans after August 2.
A handful of economic analysts have argued in recent days that, due to higher daily tax receipts than anticipated, the U.S. Treasury could have enough cash on hand to pay its debts beyond the stated August 2 deadline.
Colleen Murray, a spokeswoman for the Treasury Department, shot down that theory in a Wednesday statement.
"Tax receipts were as expected for June and July," she said in a statement. "The fact remains the U.S. will exhaust borrowing authority on August 2nd and after that date there is no way to guarantee we will be able to meet all of the nation's obligations."
In a press briefing on Wednesday, White House Press Secretary Jay Carney called the August 2 deadline "hard and fast" - and noted that "there is no escaping" it.
"There are no off-ramps. People keep looking for off-ramps. They don't exist, OK? What I have said, what everyone has said is that once we lose our borrowing authority, we become at risk of default on our obligations," he said. "That deadline is hard and fast."
Pressed for details about the tangible impact of failing to meet the August 2 deadline, Carney said the U.S. would be "at risk of default on our obligations" - though he refrained from saying that the default would necessarily take place.
"Obviously, people keep paying their taxes," he said. "Revenues come in. Money comes in. The problem is there's not enough money, because we can no longer borrow money to pay all our bills."
Carney continued: "From midnight August 2nd forward, you are running on fumes. And it's a cascade effect. And once you begin to default on your obligations, a bill comes due and you don't have the money to pay it, and you are in default. And that process begins at midnight on August 2nd in terms of the no longer being able to borrow, which puts you at risk of default."
If Congress did fail to raise the debt ceiling by August 2, the Treasury Department could face its day of reckoning on August 4, when it will auction off $90 billion in debt. Possible investors would stay away from the auctioning table, and the U.S. wouldn't be able to refinance that debt.
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Lucy Madison Lucy Madison is a political reporter for CBSNews.com.
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