Treasury Secretary Jacob J. Lew warned Congress that the U.S. will exhaust its borrowing authority as soon as late February and urged lawmakers to raise the federal debt limit weeks before then.
The Treasury Department estimates that so-called extraordinary measures used to avoid breaching the debt limit “would be able to extend the nation’s borrowing authority only until late February or early March 2014,” Lew said in a letter today to House Speaker John Boehner and other congressional leaders.
“While this forecast is subject to inherent variability, we do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time -- principally because the government experiences large net cash outflows in February and March due to tax refunds,” Lew wrote.
The Treasury uses the measures, including suspending sales of non-marketable state and local government securities, to keep paying bills while staying under the limit. The accounting maneuvers have become customary in the past two decades as administrations of both parties have used them to avoid breaching the debt ceiling.
Lew’s letter is the Obama administration’s first salvo in the latest confrontation between Democrats and House Republicans over the borrowing limit. The last standoff ended on Oct. 17, the day Lew had said the U.S. would exhaust its borrowing authority, when President Barack Obama signed legislation to suspend the debt ceiling until Feb. 7 and end a 16-day partial government shutdown.
In his letter, Lew urged Congress “to take action to raise the debt limit at the earliest possible moment and ideally well before Feb. 7, 2014.”
The Obama administration and House Republicans engaged in months of debate over the debt limit earlier this year and in 2011. Republicans have demanded spending cuts in exchange for raising or suspending the ceiling while Lew has argued that waiting until the last minute hurts the U.S. economy.
Paul Ryan, the chairman of the House Budget Committee who was the Republican author of the bipartisan budget agreement, said Dec. 15 that Republicans will meet after the holidays to determine what they’ll seek in exchange for raising the debt ceiling.
The debt ceiling was $16.7 trillion until Obama signed the suspension in October. As of Dec. 17, the debt that would be subject to limit was $17.2 trillion.
“Every time the president asks us to raise the debt ceiling is a good time to achieve something significant for the country,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Dec. 17. “The debt ceiling legislation is a time that brings us all together and gets the president’s attention.”
McConnell, a chief architect of a 2011 law raising the debt ceiling and the October deal to suspend the limit, said he was eager to see what conditions the Republican-controlled House wants.
“I can’t imagine it being done clean,” he said. “We’ll have to see what the House insists on adding to it as a condition for passing it.”