The Treasury Department will all but completely exhaust its abilities to pay the nation's bills by Feb. 27 unless Congress raises the debt ceiling, according to a new letter sent to lawmakers Friday by Secretary Jack Lew.
Lew's warning moves up the deadline for action by Congress, since the Treasury secretary had previously only offered "late February" as a deadline.
Lew warned that it will be incredibly difficult to predict exactly how long Treasury's cash would last before the government would miss a payment.
At this time of year, the government’s cash flow is especially hard to predict given tax filing season. Furthermore, he warned the government would diminish its meager cash reserves very quickly as the IRS cuts a large numbers of tax refund checks.
The nation’s borrowing cap took effect once again on Friday after it was suspended as part of the deal to end the government shutdown in October.
With no hike in sight, the Treasury has begun employing its “extraordinary measures” to free up space beneath the cap to continue borrowing to pay bills.
Lew estimated, with caveats, that the government would have just $50 billion in cash after Feb. 27. And those dollars would dissipate quickly, he said as the government has doled out as much as $15 billion in tax refunds on any given day. Net expenditures for the government could exceed $60 billion on any given day.
Given that unpredictability, Lew again urged Congress to act quickly to boost the cap.
“Extraordinary measures are likely to be exhausted in less than three weeks,” he warned. “Congress is scheduled to be out of session for part of that time, and it would be a mistake to wait until the last possible minute to act.”
House Republicans have abandoned efforts to pass a debt limit hike on their own, and instead are looking for a package that could attract sufficient Democratic support. But Democrats so far are insisting on a "clean" hike that includes no other provisions.
The House is in for only an abbreviated session next week, as House Democrats will spend Thursday and Friday at their annual retreat. And Congress is scheduled to be in recess the following week for the President’s Day holiday.
House Republicans have yet to settle on a plan to boost the limit, GOP aides cautioned Friday. A potential fix to the reimbursement rate for doctors treating Medicare patients, known as the “doc fix,” has been discussed as an option, as well as reversing changes made to the cost of living benefits for military retirees enacted in the recent budget agreement.
But House Minority Leader Nancy Pelosi (D-Calif.) used Lew's statement to hammer Republicans and again demand a “clean” increase to the debt ceiling, free of any policy riders. She also noted that Congress has only a handful of days left when both chambers are in session before the deadline.
“With only five days left in session before the deadline, we must act now. Democrats are ready to work with our Republican colleagues to enact a clean increase in the debt ceiling,” she said in a statement. “Democrats hope the Republican leadership makes the right choice and brings this up for a vote, so our country can pay our bills.”