Treasury secretary ups pressure on Congress for debt-limit action

Treasury Secretary Jack Lew again pushed Congress on Thursday to raise the debt limit as soon as possible, with as little drama as possible.

In a new letter sent to congressional leaders, Lew did not provide an updated timeline for when the nation would no longer be able to pay all of its bills. Instead, he said the timeline he laid out at the end of July — that the nation would not be in danger of default until late October at the earliest — remains his best estimate.

{mosads}Lew’s latest letter served as more of a technical update about the state of the Treasury’s finances, as the department works to operate with little room underneath an $18 trillion borrowing cap. It was also another opportunity to press lawmakers into acting and warning of the dire consequences that could come with inaction.

“In the past, failure to raise the debt limit in a timely manner has negatively impacted business and consumer confidence, financial markets, and the credit rating of the United States. To avoid these unnecessary risks, I respectfully urge Congress to raise the debt limit as soon as possible, protect the full faith and credit of the United States, and remove the threat of default,” he wrote.

While Lew urge lawmakers to act, the attention on Capitol Hill has been consumed with fights over President Obama’s nuclear deal with Iran and efforts to avoid a government shutdown at the end of the month. On Thursday, House Republicans advanced legislation aimed at ensuring payments on public debt and Social Security could be made even without increasing the borrowing limit, but Democrats countered that it ignored a host of other problems that can come with debt-limit drama.

Outside experts have projected that the government will be at risk of being unable to pay all its bills sometime in November or December. The government reached its borrowing cap in March, after which the Treasury had to operate beneath that limit with existing tools.

Lew said he was continuing to employ “extraordinary measures” to free up space under that borrowing cap, with the added goal of maintaining a cash reserve of at least $150 billion.

The Treasury decided to hold onto that much cash, which generally can cover a week’s worth of government bills, earlier this year. The move was made to ensure the government could continue to pay bills in case of an unforeseen disruption of normal operations, such as a natural disaster or terrorist attack.

Lew said in his  letter that the government briefly dipped below that $150 billion threshold on Aug. 19 but will likely rise back above that level in mid-September, when new corporate and individual taxes come in.

After that point, Lew expects the Treasury will see that cash reserve gradually dwindle.