Congress must agree to raise the nation’s debt ceiling by Oct. 17, the Treasury Department said Wednesday.
Treasury Secretary Jack Lew had previously set a hazier deadline of mid-October for lifting the $16.7 trillion limit.
Because of lower than expected revenue, Lew said, the Treasury would only have around $30 billion on that day. The federal government can owe up to $60 billion on any given day, Lew added.
If Washington does not raise the debt ceiling, the U.S. would default on its debt for the first time — an outcome that economists say is likely far worse than the government shutdown that could occur in less than a week. The debt ceiling fight in the summer of 2011 led S&P to downgrade the U.S. credit rating, the first downgrade in U.S. history.
President Obama has vowed not to negotiate over raising the debt ceiling, after agreeing to the Budget Control Act in August 2011, and Lew reiterated that stance in his letter to Boehner.
“If Congress were to repeat that brinksmanship in 2013, it could inflict even greater harm on the economy. And if the government should ultimately become unable to pay all of its bills, the results could be catastrophic.”
But Republicans say that there’s a history of attaching fiscal reforms to a debt limit hike and are already preparing their demands for raising the ceiling.
House GOP leadership has already laid out a plan that would request a grab bag of Republican priorities — a delay of the healthcare law, instructions for tax reform and approval of the Keystone XL oil sands pipeline — for raising the debt ceiling.
The GOP is also currently weighing how hard to push for rolling back the president’s healthcare law in the negotiations over funding the government past Sept. 30.
In his letter, Lew warns the GOP against a plan to prioritize certain payments, like to creditors and for Social Security, once extraordinary measures are gone.
“There is no way of knowing the damage any prioritization plan would have on our economy and financial markets,” Lew wrote. “It would represent an irresponsible retreat from a core American value: We are a nation that honors all of its commitments.”