The Obama administration today warned that the U.S. will need to raise the nation's debt ceiling by mid-October -- earlier than some had predicted.
In a letter sent Monday to congressional leaders, Treasury Secretary Jack Lew said the "extraordinary measures" Treasury took to avoid default will be "exhausted" by mid October. At that point, he writes, the U.S. will have reached the limit of its borrowing authority.
"Congress should act as soon as possible to protect America's good credit by extending normal borrowing authority well before any risk of default becomes imminent," Lew wrote, noting that when the limit hits, the cash balance would be $50 billion -- "insufficient to cover net expenditures for an extended period of time."
Republicans have want to use the vote on raising the debt ceiling to cut spending; the White House has said it won’t negotiate. Lew in the letter warns that only Congress can extend the borrowing authority and failing to do so "would cause irreprable harm to the American economy."
Texas Sen. Ted Cruz is demanding that other Republican lawmakers try to block funding to halt Obama's health care law by providing no money for it in appropriations bills for the 2014 fiscal year that starts Oct. 1 and by withholding funding as a condition for agreeing to raise the federal debt ceiling.
White House spokesman Jay Carney said the administration's stance is "unequivocal. We will not negotiate with Republicans in Congress over Congress's responsibility to pay the bills that Congress has racked up, period.
"It is Congress's responsibility to maintain the full faith and credit of the United States. We have never defaulted, and we must never default. That is our position, 100 percent, full-stop."
Lew's estimate "fits precisely" with the Bipartisan Policy Center's estimates this summer, said Steve Bell, senior director of the Economic Policy Project.
"Based on the Treasury estimate today that a cash balance of only $50 billion would be available to fund expenditures by the middle of October, we believe that Secretary Lew is prudent in requesting that the country’s borrowing authority be raised before mid-October," Bell said.
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