Congress has less than three weeks to act to raise the debt limit, Treasury Secretary Jack Lew said Friday, warning that after February 27, the government may not be able to meet all of its obligations without additional borrowing.
The federal debt ceiling was suspended until today under the budget agreement passed last November. The Treasury Department will use so-called "extraordinary measures" to shift federal money around to meet obligations, but owing to large payments due this month those efforts will only last three weeks.
"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," Lew wrote Friday in a letter to Congressional leaders. "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."
House Republicans are still plotting out a strategy to raise the debt ceiling, with conservative lawmakers looking to extract concessions for an increase, but a large contingent fearing the impact of another financial showdown in a midterm election year.