Congress Is Warned Anew Not to Breach Debt Ceiling
By ANNIE LOWREY
Published: December 19, 2013
WASHINGTON — With its new budget deal, Congress has avoided one threat of another government shutdown. But unless Congress acts, the threat of a breach of the debt ceiling looms early next year, the Treasury Department warned in a letter to congressional leaders on Thursday.
Manuel Balce Ceneta/Associated Press
Treasury Secretary Jacob J. Lew said that the government might run out of cash to pay the country’s bills by late February or early March. That sets up yet another showdown in Congress over raising or suspending the debt limit, a statutory limit on the total amount of United States borrowing, early in the year.
“The creditworthiness of the United States is an essential underpinning of our strength as a nation; it is not a bargaining chip to be used for partisan political ends,” Mr. Lew said in the letter. “Increasing the debt limit does not authorize new spending commitments. It simply allows the government to pay for expenditures Congress has already approved.”
The White House has generally refused to exchange any budgetary or policy changes for raising the debt ceiling with Republicans. A senior Treasury official who spoke on the condition of anonymity said that remained the case.
But this month, Representative Paul Ryan, the Wisconsin Republican who heads the House Budget Committee, said that Republicans would insist on a negotiation. “We don’t want nothing out of this debt limit,” he said on “Fox News Sunday.” “We are going to decide what it is we can accomplish out of this debt limit fight.”
Currently, the Treasury is able to issue debt as needed. Come Feb. 7, it loses that ability, according to a deal brokered in Congress to end the government shutdown this fall. At that point, the Treasury would have to use “extraordinary measures” to free up enough cash to pay the country’s bills.
Those measures buy only so much time, the Treasury warned Congress again. By early March at the latest, the country would be on the precipice of default.
Previously, the so-called extraordinary measures have bought the Treasury months, rather than weeks. But early in the year, the Treasury generally runs a deficit until tax payments start flowing in later in the spring. For that reason, the department expects its extraordinary measures to be used up more quickly.
The senior Treasury official expressed some optimism that the recent détente between congressional Democrats and Republicans — including the passage of a bipartisan budget deal to set spending levels for the next two years — might continue next year. The official also said that the repeated experience of getting close to default, leading to drops in business confidence and queasiness in the financial markets, might spur both sides to cut a deal.