Treasury Secretary Jack Lew has warned that he US will hit its debt ceiling by October 17, leaving the government with half the money needed to pay its bills.
Jack Lew said that unless the US is allowed to extend its borrowing limit, the country will be left with about $30 billion to meet its commitments.
“Net expenditures on certain days can be as high as $60 billion,” he said.
The US government and Republicans are at stalemate over extending the credit limit needed to avoid default.
President Barack Obama and the Democrats have said they will not negotiate with Republicans over their demand that the government agrees budget cuts in return for backing a rise in the borrowing limit.
Jack Lew’s comments underline how close Washington is to running out of money. Failure to reach a deal would be “catastrophic” for the US economy, he said in a letter to House Speaker John Boehner.
“Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30 billion to meet our country’s commitments.
Jack Lew said that unless the US is allowed to extend its borrowing limit, the country will be left with about $30 billion to meet its commitments
“If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history,” Jack Lew said.
Jack Lew urged Congress to “act immediately” and increase the borrowing ceiling, which has been limited at $16.7 trillion since May.
In return for supporting a rise in the ceiling, Republicans are pushing for a series of measures, including a delay by a year in the introduction of the Affordable Care Act, which would increase benefits under Barack Obama’s Medicare health programme.
A spokesman for John Boehner said Jack Lew’s letter was a reminder of the need for an agreement to raise the ceiling while at the same time cutting US debt.
But he added: “And it should remind President Obama that refusing to negotiate with Congress on solutions just isn’t an option.”
Washington faced a similar impasse over its debt ceiling in 2011. Republicans and the Democrats only reached a compromise on the day the government’s ability to borrow money were due to run out.
In his letter, Jack Lew reminded Congress that the 2011 battle “caused significant harm to the economy”.
That fight was resolved just hours before the country could have defaulted on its debt, but nevertheless led to ratings agency Standard & Poor’s downgrading the US for the first time ever.
The 2011 compromise included a series of automatic budget cuts known as the “sequester” which came into affect earlier this year.
A government audit has found that budget cuts may have been the cause for lax security at the Washington D.C. Navy Yards where 12 people were shot dead and eight others were injured on Monday morning.
According to a yet-to-be-released government audit, federal oversight investigators concluded that the reduced security measures at the base left security risks unaddressed.
A report by the Department of Defense Inspector General’s office shows that they were concerned about the access that would be granted to outside contractors – like that of Aaron Alexis, the suspect who was killed by police during the Monday morning shooting.
The report states that the Navy “did not effectively mitigate access control risks associated with contractor installation access” to the Navy Yards.
Time Magazine published excerpts from the report after having been read portions by an unidentified federal official who had access to the Inspector General’s findings.
The security risks are placed squarely on the Navy administrators who were trying “to reduce access control costs”.
The process of gaining access to the administrative facility- where about 3,000 people work- is under severe scrutiny.
In a Monday night press conference, FBI assistant D.C. director in charge Valerie Parlave said that they concluded Aaron Alexis had legitimately accessed the building as his status as a contractor would have given him sufficient credentials to enter unquestioned.
Budget cuts may have been the cause for lax security at the Washington D.C. Navy Yards where 12 people were shot dead and eight others were injured
“He utilized a valid pass,” Valerie Parlave said during the press conference.
Aaron Alexis, 34, became a full-time Navy reservist in 2007 but was dismissed in 2011 following a series of ‘misconduct’ violations.
As a contractor for a group working for a subcontractor used by Hewlett-Packard, Aaron Alexis had the proper identification to be allowed into Navy Yard’s Building 179 where he began shooting.
“He did have a secret clearance. And he did have a CAC [common access card],” said Thomas Hoshko, CEO of subcontracting group The Experts Inc who employed Aaron Alexis.
Asked when Aaron Alexis was supposed to start work, Thomas Hoshko told Reuters that it was unclear when Alexis was supposed to start his latest stint in the government facility: “That’s what I got to find out, if he was supposed to start today … It’s not clear to me.”
“We had just recently re-hired him. Another background investigation was re-run and cleared through the defense security service in July 2013.”
Another problem with Aaron Alexis that should have been flagged up by the security access system is that he had two prior arrests- one in 2004 for shooting someone’s tires in an anger-fueled “blackout” and another in 2010 when he said that he accidentally fired into a neighbor’s apartment while cleaning his gun.
The security assessment report cites the fact that a number of people with criminal histories were able to bypass the Navy Yard’s security without any alarm.
Time reports that the audit cited 52 instances where “convicted felons received routine unauthorized installation access, placing military personnel, attendants, civilians in installations at an increased security risk”.
The research into the security inefficiencies at Navy Yard began in September 2012 and carried on through August of this year. The final report will be published within the next 30 days.
Hundreds of thousands of people have taken part in protests across Portugal against government austerity measures.
Huge crowds gathered in the capital Lisbon to demand the government resign.
Many carried placards condemning the “Troika” of the IMF, the European Commission and the European Central Bank, which demanded budget cuts in return for a financial bailout.
The conservative government has introduced steep tax rises as it tries to reduce a huge budget deficit.
Unemployment is at a record 17.6% and the economy is expected to contract by 2% this year – the third straight year of recession.
The demonstrations organized on social media also have the backing of Portugal’s main trade union federation.
On Saturday, organizers said as many as 500,000 protested in Lisbon, and hundreds of thousands more in other towns and cities.
The rallies coincide with a visit by inspectors from the EU and the IMF, which demanded austerity measures as a condition for a 78 billion-euro bailout in 2011.
Hundreds of thousands of people have taken part in protests across Portugal against government austerity measures
Protesters carried banners with slogans such as “Austerity Kills” and “Screw the Troika”.
They also chanted a popular song “Grandola” associated with the 1974 “Carnation Revolution” that brought an end to dictatorship.
“This government has left the people on bread and water, selling off state assets for peanuts to pay back debts that were contracted by corrupt politicians to benefit bankers,” film director Fabio Carvalho, who was among the protesters in Lisbon, was quoted as saying by Reuters.
“If not today, things have to change tomorrow and we need to remain in the streets for the government to fall.”
The demonstrators are demanding a complete change of course from the government, but it says further spending cuts are necessary to revive the economy.
This year’s budget was Portugal’s toughest in living memory, imposing tax rises that for many workers amount to a month’s wages.
But the gloomy economic outlook means it will almost certainly have to find more saving.
President Barack Obama has signed into effect a wave of steep spending cuts which he has warned could damage the US economy.
The cuts – known as the sequester and drawn up two years ago – will take $85 billion from the US federal budget this year.
Last-ditch talks at the White House to avert the reductions before Friday’s deadline broke up without agreement.
The IMF has warned the cuts could slow global economic growth.
The cuts were designed to be so brutally painful that politicians would be forced to agree on a better way of balancing the books.
However, as the midnight deadline loomed on Friday, Barack Obama and Republican congressional leaders still failed to agree on a way to avoid them.
The two sides are at odds over Barack Obama’s insistence on raising taxes as part of any plan for tackling the country’s $16.6 trillion debt.
After the White House talks broke up, Barack Obama blamed Republicans for the impasse.
“They’ve allowed these cuts to happen because they refuse to budge on closing a single wasteful loophole to help reduce the deficit,” he said.
Barack Obama warned the cuts – if fully realized – would slow US economic growth by half of 1% and cost 750,000 jobs.
“We shouldn’t be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on,” he said.
The sequester was drawn up in mid-2011 as Congress and the White House feuded over raising the debt ceiling and how to slash the huge US deficit.
Republicans wanted deep cuts in spending while Democrats insisted on raising taxes.
At the end of 2012 Congress and the White House struck a dramatic deal to avoid what was dubbed the “fiscal cliff”, that included expiring tax breaks and the sequester.
Republicans agreed to Barack Obama’s demand to raise taxes for the rich and Congress postponed the deadline for the budget cuts until March 1.
President Barack Obama has signed into effect a wave of steep spending cuts which he has warned could damage the US economy
About half the cuts will come from the defence budget. Incoming defence secretary Chuck Hagel has warned of “significant impacts” on the military.
Chuck Hagel said the cuts “will cause pain, particularly among our civilian workforce and their families”.
“Let me make it clear that this uncertainty puts at risk our ability to effectively fulfill all of our missions,” Chuck Hagel said.
“Later this month, we intend to issue preliminary notifications to thousands of civilian employees who will be furloughed [put on unpaid leave].”
Defence officials say 800,000 civilian employees will have their working week reduced. They say they will also have to scale back flight hours for warplanes and postpone some equipment maintenance.
The deployment of a second aircraft carrier to the Gulf has also been cancelled.
On Friday, Republican House Speaker John Boehner reiterated his party’s refusal to allow taxes to rise and challenged the gridlocked US Senate to pass a bill first before the House acted on a plan.
“Let’s make it clear that the president got his tax hikes on 1 January,” he said as he left the White House.
“The discussion about revenue, in my view, is over. It’s about taking on the spending problem.”
Correspondents say attention will now turn to the next congressional challenge – a possible shutdown of the US government if no funding bill is passed in the next month.
On March 27 a temporary federal budget that has kept the federal government running since 2012 is due to expire.
House Republicans have said they will vote on a bill next week to fund the government through the end of the fiscal year, on September 30, but keep in place some automatic cuts taking effect on Friday.
Casoria Contemporary Art Museum in Naples, Italy, has started burning its artworks in protest at budget cuts which it says have left cultural institutions out of pocket.
Museum director Antonio Manfredi set fire to the first painting on Tuesday.
“Our 1,000 artworks are headed for destruction anyway because of the government’s indifference,” Antonio Manfredi said.
The work was by French artist Severine Bourguignon, who was in favor of the protest and watched it online.
Antonio Manfredi plans to burn three paintings a week from now on, in a protest he has dubbed “Art War”.
Artists from across Europe have lent their support, including Welsh sculptor John Brown, who torched one of his works, Manifesto, on Monday.
John Brown said his organization, the Documented Art Space in Harlech, North Wales, had exhibited at the Casoria museum in the past.
He said the loss of his artwork had not been particularly upsetting.
“We work in a fairly contemporary manner so the process of making art, and the interaction with people, is more important than keeping it as a precious object.”
John Brown called the burning “a symbolic act” to “protest against the way the economic crisis is being dealt with”.
“These cuts reach beyond the confines of the visual arts and affect the cohesive well-being of millions of people all over the world.”
Casoria Contemporary Art Museum director Antonio Manfredi sets fire to a Severine Bourguignon painting
Italy’s debt crisis led to the resignation of Prime Minister Silvio Berlusconi last year. Since his departure, the government has passed a tough package of austerity measures and other reforms.
Art institutions say they have been particularly affected by the country’s economic woes, with state subsidies and charitable donations drying up.
One of Italy’s leading galleries, the Maxxi Museum of Contemporary Art, said its funding had been cut by 43% in 2011.
When its board of directors failed to approve the 2012 budget last week, the Culture Ministry took steps to replace them with a government-appointed administrator.
International concern was also raised last year over the neglect of Pompeii, one of the world’s most precious archaeological sites.
A number of structures in the ancient city have fully or partially collapsed, including the “House of Gladiators” which fell down 18 months ago.
However, Prime Minister Mario Monti announced a 105 million Euros project to reconstruct the ruins earlier this month.
Antonio Manfredi is known as an outspoken and radical museum director.
He opened the Casoria gallery in his hometown, just outside Naples, in 2005 and several of his exhibitions have drawn the ire of the local mafia.
In 2009, a life-size effigy of an African figure was left impaled over the museum gates following an exhibition of art that dealt with prostitution – a trade occupied locally almost entirely by African immigrants and controlled by organized criminals.
Antonio Manfredi has also blamed the theft of security cameras and several attempted break-ins on the mafia.
His attempts to focus attention on his museum’s funding crisis have been crafted with a keen eye for publicity.
Last year, Antonio Manfredi announced he had written a letter to German Chancellor Angela Merkel asking for asylum, saying he was fed up with the government’s failure to protect Italy’s rich cultural heritage.
He said he would take his entire museum with him if the asylum was granted, but never received a reply.
Antonio Manfredi said the latest protest will continue unless the funding situation improves.
A statement from the museum described the first burning as “political, necessary, and compelling in the face of these adverse circumstances”.