WASHINGTON -- Treasury Secretary Jacob J. Lew formally told congressional leaders Thursday they must raise the debt limit by early March at the latest, warning the government has less ability to postpone a potential default than in the past.
Some top Republicans have said in recent days they plan to try to get concessions from the Obama administration in exchange for raising the $16.7-trillion debt limit, which was suspended last fall until Feb. 7.
With rumblings of another showdown over the politically volatile issue, Lew made clear Congress needs to “take prompt action to protect the full faith and credit of the United States.”
Treasury will be able to use so-called extraordinary measures to extend the nation’s borrowing ability until “late February or early March,” Lew wrote in a letter to House and Senate leaders.
“While this forecast is subject to inherent variability, we do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time,” Lew said.
Those measures, which include suspending investments in some federal pension funds, are less effective in February in March when the government is sending out tax refunds, he said.
During the last debt limit battle, the nation technically reached the debt limit May 18. But Treasury officials were able to use the measures to juggle the federal government’s finances and put off the need to raise the debt limit until Oct. 17.
Treasury was helped by combined dividend payments of nearly $60 billion from seized housing finance firms Fannie Mae and Freddie Mac.
But the unexpectedly large payments were due to one-time tax changes made by the companies. No such windfall is expected in the coming months, a senior Obama administration official said.
Democrats and Republicans worked together in recent weeks to push a budget agreement through Congress that should avert a federal government shutdown next month.
But many conservative Republicans were unhappy with that deal and have talked about tougher negotiations with the White House in exchange for raising the debt limit.
“Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country,” Senate Minority Leader Mitch McConnell (R-Ky.), said Tuesday.
McConnell added he doubted the Senate or House would pass a debt limit increase without any strings attached.
But President Obama has been firm in the past he would not negotiate over raising the debt limit, arguing it was the responsibility of Congress to borrow money to pay for spending it already had authorized.
Lew reiterated that position Thursday.
“The creditworthiness of the United States is an essential underpinning of our strength as a nation; it is not a bargaining chip to be used for partisan political ends,” he wrote.