The Obama administration has said it will not negotiate over raising the borrowing limit. Debt limit to be hit by mid-October

Treasury Secretary Jack Lew on Monday warned congressional leaders that the government will run up against its borrowing limit by mid-October, setting up an earlier-than-expected deadline for what will be the fall’s most contentious battle between the Obama administration and Republicans.

Lew said his department will soon run out of the accounting maneuvers it’s been using to stave off default and warned lawmakers not to wait until the last minute to raise the debt limit.


“Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent,” Lew said in a letter sent to the Hill Monday.

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The deadline, sooner than what some forecasters had estimated, comes amid concern that Congress has no plan for handling the needed increase to the government’s borrowing authority.

The Obama administration has said it will not negotiate over raising the debt limit , while Republicans have a long list of demands, including revising President Barack Obama’s signature health-care law .

Raising the debt ceiling is just one of a handful of fiscal deadlines facing lawmakers this fall. They also need to fund the government into the next fiscal year, which begins Oct. 1, as well as decide what if anything to do about another looming round of the automatic spending cuts known as sequestration.

House Speaker John Boehner is considering short-term legislation that would fund agencies into the beginning of the next fiscal year.

That’s designed to allow lawmakers to focus on the debt limit and sequestration as well as to figure out how much to spend on those agency budgets for the duration of the 2014 fiscal year.

Exactly when Congress must act on the debt limit is usually hard to predict, mostly because tax revenues can vary widely from month to month. Treasury has been using accounting maneuvers to avoid busting the borrowing cap since May, the last time it was increased. By mid-October, those so-called “extraordinary measures” will be exhausted, Lew warned, leaving the government to pay its bills out of incoming tax revenue. That would leave the agency with only enough cash on hand to pay some of the 80 million payments it makes each month, Lew said.

The administration has said any talk of not raising the debt limit quickly is irresponsible and will hurt the economy, pointing to the problems in financial markets during a tense standoff over the the debt limit in 2011.

“We cannot afford a repeat of what happened in 2011,” Lew said earlier this month in a speech in California. “We cannot afford for Congress to wait until some unknowable last minute to resolve this matter on the eve of a deadline. We cannot afford another unnecessary self-inflicted wound.”

Goldman Sachs has predicted the government will hit the limit around November 1, though it said it could end up being two weeks sooner – or later – depending in part on the strength of quarterly corporate-income tax payments that are due next month. The Congressional Budget office has said the deadline will come either in October or November.

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