Committee for a Responsible Federal Budget

Lew: Next Debt Limit Date is Late February

Jan 23, 2014 | Budget Process

Yesterday, Treasury Secretary Jacob Lew sent a letter to Congress, updating the Treasury's projections of when the nation would hit its statutory borrowing limit. In mid-October, the deal that ended the government shutdown also suspended the nation's $16.7 trillion debt limit until February 7. On that date, the debt limit will automatically be reinstated, with an increase to cover any borrowing that occurred from October to February. The new debt limit will be set at approximately $17.3 trillion. If Congress does not raise the limit by February 7, the Treasury Department can use "extraordinary measures" to allow the federal government to continue borrowing until Congress raises the limit.

Previously, Secretary Lew had estimated that these extraordinary measures would allow the nation to borrow until late February or early March. In yesterday's letter, he revised the estimate, stating that the debt limit will almost certainly need to be raised by late February. Because many people file for tax refunds in February, it is traditionally the month with the biggest deficit.

Lew explained the importance of raising the debt limit before February 7, but especially by late February:

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. I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit before February 7, 2014, and certainly before late February.

Congress should avoid the debt-limit brinkmanship that has undermined financial market confidence in the markets, yet should use the opportunity to focus on the drivers of the national debt. Even though recent deficit reduction agreements have improved the debt picture over the next few years, the long-term drivers of our debt—entitlement spending and an outdated tax code—have barely been addressed.

To read the full letter, click here.

Confused? Read our short Q&A: Everything You Should Know About the Debt Ceiling.