By Peter Schroeder – 10/01/15 05:01 PM EDT
Congress will need to address the debt limit by Nov. 5 or risk a catastrophic default on the nation’s debt, according to Treasury Secretary Jack Lew.
The deadline is the first the Obama administration has set for raising the $18.1 trillion debt limit, and comes in somewhat earlier than what most experts had predicted.
The timeline gives lawmakers just a few weeks to hammer out some sort of agreement, and sets the stage for what could be a hectic scramble, particularly in the House as Speaker John Boehner (R-Ohio) is looking to accomplish as much as possible before resigning at the end of October.
In a new letter to Congress, Lew said the latest figures coming into his department show that the government will have less than $30 billion on hand “on or around” Nov. 5. He added that that amount would be “far short” of what is needed on certain days, when government bills can total as much as $60 billion.
“We anticipate that our remaining cash would be depleted quickly,” he wrote. “Without sufficient cash, it would be impossible for the United States of America to meet all its obligations for the first time in our history.”
The debt limit fight will come at a tenuous time in Congress.
Boehner, President Obama and Senate Majority Leader Mitch McConnell (R-Ky.) are expected to begin formal budget talks soon on spending levels for the government for the next year.
On Wednesday, Congress passed a short-term bill to prevent a government shutdown. It will run out on Dec. 11.
Boehner has said he wants to “clean up the barn” for his successor, but it’s not clear how far he can go in negotiations as a lame-duck Speaker.
The administration has repeatedly said it will not negotiate raising the debt limit, but congressional Republicans in the past have pressed for spending cuts in exchange for raising the debt ceiling. Prior to the deadline, there had been talk of tying the debt limit to budget talks. But the month-long gap between the debt-limit deadline and expiration of government funding complicates matters.
Congress is also looking to approve a long-term highway funding bill, and deal with a series of tax breaks that supporters want to extend.
With a Nov. 5 deadline, Congress will have to deal with the debt fight as it navigates GOP elections set for Oct. 8. A full House vote on the next Speaker must also be scheduled.
The government reached its borrowing cap in March; since then, the Treasury has been deploying “extraordinary measures” to free up room beneath that limit.
Lew’s deadline is a bit earlier than most projections, which had anticipated the government would need a borrowing boost sometime in mid-November or December.
The Congressional Budget Office had predicted in August the nation could be in danger of default in mid-November or December.
But Lew said that in the last several days, the government has seen tax receipts come in lower than expected and that some investments in military trust funds cost more than antipicated, placing an additional squeeze on the Treasury’s books. Lew had previously only told lawmakers he was confident the government could continue paying its bills through late October.
In his letter, Lew did note that the deadline could shift, because Treasury’s estimates are “subject to inherent variability.” But he did add that in the last several weeks, Treasury had seen a negative trend in its net resources, suggesting that, if anything, the deadline could move up.
“The ultimate date that Treasury exhausts extraordinary measures, however, could be sooner or later than November 5,” he wrote. “We will continue to update Congress as we receive additional information.”