In a letter to Congress, U.S. Treasury Secretary
Jack Lew said that the United States will hit its debt ceiling limit no later
than October 17th and exhaust its borrowing capacity.
"If the government should ultimately
become unable to pay all of its bills, the results could be catastrophic,"
Lew’s letter read. The U.S. would have only about $30 billion cash available
after October 17th. Previously, the U.S. Treasury said it expected
to have $50 billion in cash on hand when it hit the debt ceiling. The updated
estimate reflects fresh information on quarterly tax receipts and the
activities of certain large government trust funds.
Lew’s forecast puts pressure
on Congress to make a decision about raising the debt ceiling from $16.7
trillion and keep the government funded beyond the start of the fiscal year on
The government has been bumping up against the
debt ceiling since May, but it has not defaulted on any obligations. It has
taken emergency measures to manage its cash, such as suspending investments in
pension funds for federal workers.
Congress is divided on how to extend the Treasury’s
borrowing ability. The Republican-controlled House of Representatives used the debt
ceiling to get concessions from Democrats in 2011. Republicans are looking for
votes to defund to Obama's Affordable Healthcare Act in exchange for their vote
to up the debt limit and avoid a government shutdown.
President Barack Obama has said he will not negotiate with
Republicans on extending the Treasury's borrowing capacity and Democratic lawmakers
are pushing for a clean debt limit raise.
A spokesman for Republican House Speaker John
Boehner said Lew's warning was "another reminder that we need to work
together soon on a bill that raises the debt limit and deals with causes of the
debt by cutting Washington spending and increasing economic growth."
"It should remind President Obama that refusing to negotiate
with Congress on solutions just isn't an option," Boehner's spokesman
Michael Steel said.
Lew also warned that a repeat of the
brinkmanship over the debt limit seen in 2011, which led to a downgrade in the
United States' pristine credit rating, would inflict even more harm on the
"If the government should
ultimately become unable to pay all of its bills, the results could be
catastrophic," he said.