U.S. Treasury Secretary Jack Lew said last week that a repeat of the 2011 debt limit crisis would be detrimental to the country, saying the U.S. “cannot afford another unnecessary self-inflicted wound.”
The Treasury announced on Monday that it would reach its borrowing limit in mid-October and would be unable to pay its debts soon after, limiting the time lawmakers have to reach an agreement over the budget, The Wall Street Journal reports.
Before the Monday announcement, the Treasury had previously said the debt-ceiling deadline would be sometime after Labor Day.
The new deadline falls just two weeks after the White House and Congress must reach an agreement over how to fund government operations after the end of the federal fiscal year on Sept. 30. Failure to reach an agreement would result in a partial government shutdown, according to The Wall Street Journal.
“Even a delay of a necessary increase in the debt limit can bring harmful consequences,” Lew said, speaking before the Commonwealth Club of California. “Keep in mind, the receipt of tax revenues and the outflow of expenditures are inherently unpredictable. So it is not possible for us to estimate with exact precision when Treasury will have to depend exclusively on cash on hand to meet our country’s commitments – or how long it will take before that cash runs out. If cash on hand were to be depleted, all payments across the government — including Social Security and payments to our military and veterans — would be at risk… We cannot afford a repeat of what happened in 2011.”
House Speaker John Boehner (R-Ohio) said he would support raising the debt ceiling only with spending cuts or changes to the budget. The White House, however, has said it would not negotiate raising the debt ceiling, The Wall Street Journal reports.