By Peter Schroeder - 01/22/14 04:00 PM EST
Congress will likely need to raise the debt limit by late February to avoid a missed payment, according to Treasury Secretary Jack LewJack LewWyden seeks IRS info on firms linked to Panama Papers Treasury issues rules cracking down on offshore tax deals Overnight Finance: Jobless claims near record low | Cops bust IRS phone scam in India | Republican demands Iran sanctions docs MORE.
In a letter sent to lawmakers Wednesday, Lew said the timeline for a borrowing boost has moved up slightly. When he first pressed Congress to increase the debt cap in December, he estimated a default could occur as late as early March.
But based on “our best and most recent information,” Lew now pegged the default deadline as sometime in late February, calling on Congress to boost it as soon as possible.
Speaker John Boehner's office said that any debt ceiling increase needs to include concessions from President Obama.
"The Speaker has said that we should not default on our debt, or even get close to it, but a 'clean' debt limit increase simply won't pass in the House. We hope and expect the White House will work with us on a timely, fiscally-responsible solution," spokesman Michael Steel said.
October’s deal to end the government shutdown also suspended the nation’s $16.7 trillion borrowing cap until Feb. 7. On that date, the borrowing limit will be automatically increased to cover all governmental borrowing done during the suspended period.
And on that date, without an increase, the Treasury will begin to employ its set of “extraordinary measures” to free up room under the cap to remain current on payments.
In the past, these measures have bought Congress months to haggle over the borrowing cap. But Lew warned in his letter that the window provided by the measures will last just a few weeks this time around.
For one, the government typically experiences a significant outflow of cash during this time of year, as it sends out a slew of tax refunds. Lew also said that the amount of money the extraordinary measures will free up this time will be smaller. That’s because some of those tools, like freezing investments in some federal trust funds, are not accessible this time of year.
The takeaway from all that is that Congress will likely need to act sometime in the next four weeks to boost the debt limit or risk a damaging default.
For the time being, both sides are again staking out old debate lines on the debt limit. Republicans say they must receive some concession to agree to another borrowing boost, while the White House and Democrats insist the matter is too serious to be used as negotiating leverage.
This story was updated at 5:10 p.m.