Treasury Secretary Jack Lew (SAUL LOEB/AFP/Getty Images)
Treasury Secretary Jack Lew on Friday clarified Congress's deadline for coming to an agreement on raising the debt ceiling: Feb. 27.
That's the date when the government might lose its borrowing authority, Lew told House Speaker John Boehner (R) and other congressional leaders in a letter:
"Based on our best and most recent information ... we are not confident that the extraordinary measures will last beyond Thursday, February 27," Lew wrote in the letter. "At that point, Treasury would be left with only the cash on hand and any incoming revenue to meet our country's commitments."
The debt ceiling extension that was passed late last year technically expires Friday, but the Treasury Department can use what are known as "extraordinary measures" to make do while Congress sorts things out.
Generally, though, those extraordinary measures give Congress more than just three weeks.
Republicans are still weighing whether to ask for concessions in a debt ceiling deal but have yet to decide what to ask for. Meanwhile, some members of the party -- even from its conservative wing -- have said the GOP should just pass a so-called "clean" debt ceiling increase -- without any concessions from the White House -- because, they say, that's likely to be the outcome anyway.
Here's the full letter:
Dear Mr. Speaker:
I am writing to follow up on my previous letters regarding the debt limit and the Department of the Treasury's ability to continue to finance the government.
As you know, the Continuing Appropriations Act, 2014 temporarily suspended the statutory debt limit through today, February 7, 2014. Because Congress has not acted to approve normal borrowing authority, Treasury must begin implementing extraordinary measures that enable us, on a temporary basis, to protect the full faith and credit of the United States and to continue paying the nation's bills.
As I have noted previously, these measures are more limited than in past debt limit impasses. When I last wrote to you in January, I estimated that Treasury likely would exhaust extraordinary measures in late February. Given the heightened variability of cash flows during tax season- which began last Friday, January 31 - it is difficult to forecast with any certainty when Treasury will exhaust its borrowing capacity. Based on our best and most recent information, however, we are not confident that the extraordinary measures will last beyond Thursday, February 27. At that point, Treasury would be left with only the cash on hand and any incoming revenue to meet our country's commitments.
In light of the unpredictability of tax refund payments, it is even more difficult to forecast accurately the amount of cash that Treasury will have after our borrowing authority is exhausted. We currently estimate that the amount will be approximately $50 billion. That number, however, could be materially higher or lower, depending on the pace of tax refund filings. Regardless, any foreseeable cash balance would be exhausted quickly. In previous years, the Internal Revenue Service has issued as much as $10-15 billion in refunds on a single day and nearly $40 billion in a single week. Moreover, net daily expenditures for the government can be as high as$60 billion on certain days. If Treasury has insufficient cash on hand, it would be impossible for our nation to meet all of its obligations for the first time in history.
Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation's borrowing authority. No Congress in our history has failed to meet that responsibility, and time is short. Extraordinary measures are likely to be exhausted in less than three weeks. 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. As such, I respectfully urge Congress to move as quickly as possible, raise the debt limit, and provide certainty to the economy and to the financial markets.
Jacob J. Lew
Aaron Blake covers national politics and writes regularly for The Fix.