Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October. At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day. The cash balance at that time is currently forecasted to be approximately $50 billion.
The U.S. government already hit the statutory debt limit on May 17, so it's been running on fumes. With intense congressional debates coming up on the debt limit and government spending ('Lew Reiterates No Negotiations With Congress on Debt Limit-Bloomberg; 'Boehner Sees Showdown Over Raising Debt Limit'-NYT; 'Five Reasons the Debt Ceiling Fight Is Scarier This Time'-Businessweek), the market could see volatility again like it did in 2011. Fiscal tightening doesn't really mix well with deleveraging and mispriced manipulated markets. The S&P fell 20% peak to trough between July and October 2011 when Congress raised the debt ceiling and agreed on deficit reduction measures (signed the Budget Control Act of 2011), Standard & Poor's downgraded the U.S.'s debt rating, and when the eurozone crisis flared up. I believe the downgrade was the major catalyst for the crash. Here are the technical events that led up to the 2011 crash: July 29 (ES), July 30 (TLT), August 3 (UBS' Peter Lee), August 4 (VIX), August 8 (collectively, the first down wave), and September 22 (ES' second down wave). To prevent a similar move today, the S&P 500 must not cross the streams.
Source: Secretary Lew Sends Debt Limit Letter to Congress (8/26/2013)