US President Barack Obama’s administration warned Congress on Wednesday that the government would likely run out of borrowing authority needed to help pay its bills by late next month if lawmakers do not swiftly raise the federal debt ceiling.
Previously, the administration had projected the borrowing authority could last until as late as early March, but the US Department of the Treasury said it now believed Congress had a more narrow window in which to act.
“I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit,” US Secretary of the Treasury Jack Lew said in a letter to congressional leaders.
Congress passed a two-year budget deal last month to avert some spending cuts planned for next year, and the pact reduces the risk of a government shutdown.
However, the legislation does nothing to avoid a potential unprecedented US debt default that could occur if Washington does not raise the borrowing cap soon.
In October last year, Congress and the administration suspended a US$16.7 trillion cap on borrowing until Feb. 7. If the debt ceiling is not raised by then, the Treasury will be able to juggle money between government accounts for a few weeks to keep just under the new limit.
Lew said a late start to the tax filing season, brought about by a partial shutdown of the government late last year, will likely increase the amount of tax refunds sent out next month.
He said the department would exhaust its so-called extraordinary measures by late next month. After then, it would no longer be able to borrow to cover its expenses.
“We do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time,” he said in the letter.
Once it loses the ability to borrow, the Treasury would pay its bills by relying on incoming revenue and any cash left in public coffers.