New Debt Target: 2 August 2012

The deadline for raising the US debt ceiling or risk a default remains August 2, the US Treasury said Friday, after speculation that there might be more leeway for politicians to carve a deal.

"The Treasury Department continues to project that the United States will exhaust its borrowing authority under the debt limit on August 2, 2011," the Treasury said in a statement.

This means that the US Treasury runs out of money on 2 August. We hit the new debt ceiling sooner each time than we did the last. No actual spending cuts occur, but the debt target gets set higher and higher. Spending cuts are now automated, since politicians can't stomach what needs to be done.

"Secretary (Timothy) Geithner urges Congress to avoid the catastrophic economic and market consequences of a default crisis by raising the statutory debt limit in a timely manner."

The US ran into the $14.29 trillion statutory legal limit on borrowing on May 16, but has since used spending and accounting adjustments, and higher-than-expected tax receipts, to continue operating without impact on government obligations.

But by August 2, the government will have to begin withholding payments -- to bond holders, to civil servants, retirees or government contractors -- if the ceiling is not raised by Congress.

If we are unable to service the national debt (or simply pay the interest, not even touching the principle), setting our lending limit higher only encourages more irresponsible actions by the state.

Some economists had estimated that higher tax receipts might add a week or two to the deadline.

Republicans are refusing to raise the ceiling unless the White House agrees to sharp spending cuts while forgoing any tax increases to begin closing the government's huge budget deficit.

Geithner has warned that defaulting on bond payments would have a devastating effect, ironically forcing up government costs.

Activist Post: US debt ceiling deadline still August 2: Treasury