Treasury Secretary Jacob Lew

The next debt limit fight could be coming sooner than expected. Treasury Secretary Jacob Lew wrote to Congressional leadership informing them the Federal government will likely reach its statutory debt limit by the middle of October, but it is difficult t to precisely calculate when that will happen. From Lew’s letter:

Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October. At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day. This cash balance at that time is currently forecasted to be approximately $50 billion. [...]

As I have stated previously, Congress should act as soon as possible to meet its responsibility to the nation and to remove this threat of default. Under any circumstance-in light of its schedule, the inherent variability of cash flows, and the dire consequences of miscalculations-Congress must act before the middle of October.

There is no good reason the country shouldn’t completely eliminate the statutory debt limit. The debt limit only causes problems while providing zero benefits.

Raising the debt limit used to be a routine action by Congress but those days have passed. Republicans think threatening to destroy the economy gives them “leverage” so they are talking about trying to hold it hostage again.

A debt limit date in October possibly changes the timeline for negotiations regarding funding for the government. Republicans have talked about only a short term continuing resolution that would be just long enough to put it after the debt limit has been reached.

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