Treasury Secretary Sends Warning on Debt Limit
http://www.nytimes.com/2014/01/23/us/politics/treasury-secretary-sends-warning-on-debt-limit.html?nl=us&emc=edit_cn_20140122&_r=0
By JONATHAN WEISMANJAN. 22, 2014
WASHINGTON — Treasury Secretary Jacob J. Lew warned Congress on Wednesday that the government would most likely exhaust its ability to borrow in late February, setting up yet another fiscal showdown with Republicans, and this time earlier than congressional leaders had anticipated.
In a letter to Speaker John A. Boehner and the other top three congressional leaders, Mr. Lew said a surge of February spending, mainly tax refunds for 2013, would leave the Treasury with little room to maneuver after the official debt limit is reached on Feb. 7.
The letter amounts to an early alarm bell, coming just weeks after Congress passed its first bipartisan budget and comprehensive spending bill in years. Those bills were supposed to serve as a cease-fire in the budget wars that have rattled the country and the economy since Republicans took control of the House in 2011.
But they left untouched the debt limit, which has been a rallying cry for conservatives for three years. As recently as last week, Senator Harry Reid of Nevada, the majority leader, said the debt ceiling fight could be put off until as late as May while the Treasury shuffled government accounts to meet its obligations.
With his letter, Mr. Lew sought to end such speculation. Unlike past debt ceiling fights, this one is coming at a time of year when Treasury payments soar, leaving him little “headroom” to put off the fight. Last February, government spending reached $230 billion, compared with $45 billion in other months. This year will be worse, because the government shutdown delayed the start of tax season and will concentrate refund payments.
“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,” Mr. Lew wrote. “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 Feb. 7, 2014, and certainly before late February.”
Michael Steel, a spokesman for Mr. Boehner, reiterated that the speaker does not want to get “even close” to a default on the United States debt. But, he added, a “clean” increase in the debt limit without some concessions to Republicans “simply won’t pass in the House.”
Mr. Boehner said last week, “I would hope that the House and Senate would act quickly on a bill to increase the debt limit.” But aides signaled they would need some face-saving measure to placate House conservatives who still want to force concessions from the White House, possibly on controlling the growth of entitlement programs like Medicare or easing the path to an overhaul of the tax code.
President Obama continues to say he will not negotiate over the debt limit, which he said is a congressional responsibility, not a bargaining chip. Republicans were infuriated by that stand during the 16-day government shutdown in October. But they acquiesced, reopening the government and suspending the debt ceiling until Feb. 7. Senior congressional Democrats are pushing the White House to maintain its no-negotiating stance.
“With the bipartisan agreements on the budget and on funding the government for this year, we have an opportunity to move past the manufactured crises and work together on real challenges,” said Senator Patty Murray of Washington, the chairwoman of the Senate Budget Committee. “I hope Republicans will listen to Secretary Lew and join Democrats to ensure the U.S. pays its bills on time with no strings attached.”
House Republicans will gather next week for their annual planning retreat. That will kick off efforts to resolve an impasse on the debt ceiling.
