Secretary Lew is warning that the United States government will soon hit the debt ceiling and is asking Congress to raise the debt limit. During the previous debt ceiling fight, Congress suspended the 1917 law that implemented the debt ceiling. However, the act that suspended the law will expire this Sunday. On Monday, Secretary Lew writes that the Treasury Department will take “extraordinary measures” in order to avoid defaulting. The government is expected to default this fall, possibly in October, if nothing is done. He then asks that Congress raise the debt limit accordingly. In recent years, the debt ceiling has often become a partisan fight of spending versus cutting back, Democrats vs. Republicans. However, the debt ceiling typically is either raised or suspended in the end as a default would risk the credibility of the United States and could lead to a credit downgrade.
Below is the version of the letter that Secretary Lew sent to Speaker Boehner. All members of Congress received a letter.
Dear Mr. Speaker:
I am writing to follow up on my March 6 letter regarding the debt limit.
As you know, in February 2014, Congress passed the Temporary Debt Limit Extension Act, suspending the statutory debt limit through March 15, 2015. Beginning on Monday, March 16, the outstanding debt of the United States will be at the statutory limit. In anticipation of reaching that date, Treasury has suspended until further notice the issuance of State and Local Government Series securities, which count against the debt limit.
Because Congress has not yet acted to raise the debt limit, the Treasury Department will have to employ further extraordinary measures to continue to finance the government on a temporary basis. Therefore, beginning on March 16, I plan to declare a “debt issuance suspension period” with respect to investments of the Civil Service Retirement and Disability Fund and also suspend the daily reinvestment of Treasury securities held by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan. These actions have been employed during previous debt limit impasses and are described in the appendix to this letter.
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. The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship.
Accordingly, I respectfully urge Congress to raise the debt limit as soon as possible.
Jacob J. Lew
The full letter, including the appendix, is available here.