Treasury Secretary Jack Lew warned Thursday that the government is likely to hit the federal debt limit by Nov. 5, a deadline that is earlier than expected.
Previously, outside analysts had estimated that the Treasury would be able to pay all of the government’s bills on time without breaching the debt ceiling through mid-November to mid-December.
In a letter to members of Congress, Lew said that he moved up the timeline for the debt ceiling because of lower-than-expected receipts from taxes and government trust funds over the past 10 days.
Since the debt reached the statutory limit of $18.1 trillion in March, Lew has been employing “extraordinary measures” to pay bills without incurring new debt, mostly by managing different accounts. On Nov. 5, he said, he will have run out of such measures, and the Treasury will have only $30 billion on hand to pay expenses.
Lew also warned that his estimates were subject to uncertainty, and that there is risk involved in managing the government’s finances while the debt ceiling is binding.
Calling on Congress to raise the limit immediately, Lew wrote of the dangers of missing a payment on the federal debt. “There is no way to predict the catastrophic damage that default would have on our economy and global financial markets.”
Lew’s letter will complicate the timeline for congressional action this fall.
Congress this week passed stop-gap legislation to fund the government through mid-December, averting a shutdown. It was previously thought that the deadlines for raising the debt ceiling and funding the government would coincide. Now, Congress will have to act earlier on the debt ceiling.
House Speaker John Boehner has announced his intention to retire at the end of October, just a week before the debt ceiling deadline. Thursday’s news means that he could be faced with a choice between brokering a deal with the White House to raise the limit before leaving or leaving the task to a new speaker. In past debt-ceiling negotiations, talks have come down to days or hours before the deadline set by the Treasury secretary.
