US Treasury Secretary Jack Lew.
(Photo: PANTELIS SAITAS AFP/Getty Images)
WASHINGTON--The federal government's credit card will hit its limit in mid-October, Treasury Secretary Jack Lew said Monday in a letter to House Speaker John Boehner, R-Ohio.
Lew urged Congress to reach a budget deal to increase the $16.7 trillion borrowing limit in order to avoid rattling financial markets. Raising the debt ceiling, the nation's borrowing limit, requires congressional approval. It does not authorize new spending, but pays for spending that has already been approved.
A vote to increase the debt limit has been anticipated later this year, but Lew's Monday letter established a more specific deadline for congressional action.
The federal government makes about 80 million payments each month. If the U.S. failed to increase its borrowing authority, the Treasury would be forced to operate with only the cash it takes in every day -- an amount that would not cover its expenses and threaten payments including military salaries and Social Security payments, Lew said.
Congress approved a short-term increase in the debt ceiling earlier this year to focus on the annual budget debate. President Obama is trying to avoid a protracted debt limit fight, but he has demanded an increase with no conditions attached. Congressional Republicans, led by Boehner, have asked for commensurate spending cuts or reforms in exchange for raising the debt limit.
"The debt limit remains a reminder that, under President Obama, Washington has failed to deal seriously with America's debt and deficit," said Michael Steel, Boehner's spokesman, in response to Lew's letter.
"Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation's borrowing authority," Lew wrote, "Failure to meet that responsibility would cause irreparable harm to the American economy."