Lew said in a letter to House Speaker John A. Boehner, R-Ohio, released Monday that the government is running out of accounting maneuvers that it has used to avoid hitting the $16.7 trillion borrowing limit. He pressed Congress to act so the government can keep paying its bills.
Lew said it’s impossible to predict exactly when the borrowing limit will be reached. But he warned that if action isn’t taken soon, the government could be left with $50 billion in cash by mid-October. He says that wouldn’t be enough to cover Social Security payments, military personnel salaries, Medicare and other programs for an “extended period.”
Earlier this year, Congress temporarily suspended the borrowing limit so lawmakers could focus on other budget debates. Treasury has kept the government operating for several months through its bookkeeping maneuvers. A smaller deficit this year has also helped.
The government is spending more than it takes in, running up annual deficits in excess of $1 trillion in each of the last four budget years. It has been borrowing the difference to meet its obligations.
Republicans want to reduce future deficits by cutting back sharply on spending. Democrats have proposed a mix of spending cuts and tax increases, which Republicans strongly oppose. The issue awaits resolution when lawmakers return from the recess.
Congress last passed legislation to increase the borrowing limit in the summer of 2011 after months of negotiations. Republicans forced President Obama to accept about $2 trillion in spending cuts over the coming decade in exchange for a similar increase in the borrowing limit.
Obama says he won’t negotiate this time around and says Congress should fund the spending that it previously approved. Many Republicans want to use budget leverage to mount an assault on Obama’s signature health care law.