Treasury Secretary moves up debt limit deadline, pressures Congress to act

The nonpartisan scorekeeper said if the debt limit – which now stands at $18.1 trillion – remains unchanged, the country could see a delay in government payments, a default on its outstanding debts and a loss of its ability to borrow funds.

Disarray among Republicans over who will replace US House of Representatives Speaker John Boehner, who is retiring from Congress on October 30, is complicating efforts to negotiate on the debt ceiling.

“Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible”, the secretary wrote.

Lew has been managing government accounts to pay incoming bills without raising the debt ceiling since March, when a previous suspension of the debt ceiling ended.

As of Thursday, the Treasury Department has shortened Congress’ deadline to raise the nation’s borrowing limit to November 3.

“In the absence of congressional action, [the] Treasury would be unable to satisfy all of these obligations for the first time in the history of the United States”, Lew wrote.

Analysts at the Bipartisan Policy Center, a Washington think tank, have estimated the Treasury would run out of money between November 10 and 19.

The nonpartisan budget office moved up its forecast of how long the US could pay its bills without an increase in the debt limit by several weeks due to a larger-than-expected budget deficit in September. “And there is no way to predict the irreparable damage that default would have on global financial markets and the American people”.

House conservatives have tussled with Boehner throughout his almost five years as speaker and are playing a central role in the selection of a replacement for Boehner.

The new date should give both Boehner and Senate Majority Leader Mitch McConnell “the political cover they need” to push through an increase in the borrowing limit, she told MarketWatch in an email.