Treasury Secretary Warns U.S. Likely to Hit Debt Ceiling in February

Extraordinary measures to keep government afloat will only last a few weeks after the debt limit is reinstated and reached on Feb. 7, says Jack Lew.

January 16, 2014

National Journal

Treasury Secretary Jacob Lew warned lawmakers on Thursday that a final deadline for raising the nation's borrowing limit is likely to arrive next month, not in March, which he had previously said was a possibility.

"I think that if Congress is looking at the numbers the way we are—we have the best data—they would see that they would be looking more at the end of February than any time in March," Lew said Thursday at a discussion hosted by the Council on Foreign Relations.

The debt ceiling, which was suspended in October, will be reinstated and reached again on Feb. 7, at which point the Treasury Department can use special authority—so-called extraordinary measures—to prevent the nation from defaulting. These measures can briefly allow the United States to continue to meet its obligations until a later date, the "drop-dead" deadline. At that point, the nation risks default.

Lew's emphasis on February in his Thursday remarks was a departure from a letter he wrote to House Speaker John Boehner, R-Ohio, last month. In that letter, the Treasury secretary said his agency's authority would likely last through "late February or early March."

The unpredictable nature of tax season makes it tough to forecast the exact date when Treasury will exhaust these special measures. On Wednesday, Morgan Stanley economists estimated the drop-dead date could arrive as late as June. "We see it as a close call whether this would last only until late March or further into the spring, which would be largely determined by how strong the tax-refund season is," they wrote in a note to clients.

Lew, for his part, criticized the "Washington parlor sport" of guessing when the nation will hit the limit, and he urged lawmakers to act to raise it "as quickly as possible."

"The buildup to the last minute causes damage," he said.

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