WASHINGTON – Treasury Secretary Jacob Lew has told Congress that by late February he will run out of steps he can take to avoid a first-ever default on U.S. debt.
In a letter to congressional leaders Wednesday, Lew said he thinks he will exhaust the bookkeeping manoeuvrs he can make to avoid breaching the federal borrowing limit sooner than previously thought. He had estimated in December that he could avoid a default until late February or early March.
Under an agreement that ended the partial government shutdown in October, Congress suspended the debt limit until Feb. 7. After that, Lew would start using the bookkeeping manoeuvrs.
He urged Congress to raise the limit before Feb. 7.
Lew said the bookkeeping manoeuvrs won’t last as long as they did in previous debt-ceiling battles because of the time of year the limit will be reached. In February, the government sends out large amounts of money because of tax refunds it owes taxpayers.
He said the manoeuvrs would probably clear only $200 billion of borrowing room, less than the $330 billion that the bookkeeping steps freed up in 2013, for example.
“The significantly smaller amount of headroom that can be freed up now will quickly be exhausted by the large obligations of the government that occur in the month of February,” Lew wrote.
Some Republicans hope to use the debt limit as leverage to force the Obama administration to agree to more government spending cuts. President Barack Obama has said he will not negotiate over the debt limit.