Congress Warned US Debt Ceiling Looms
The Obama administration has warned Congress the US could run out of money to pay its bills soon after mid-October unless swift action is taken to raise government borrowing limits.
Treasury Secretary Jack Lew made the plea in a letter to Congressional leaders following several bruising political battles over the country's finances in recent years that have resulted in last-minute emergency measures to avert disaster.
Mr Lew said "Congress should act as soon as possible to protect America's good credit" urging action "well before any risk of default becomes imminent".
He warned that the government would exhaust its borrowing capacity in the middle of October and be left with about $50bn (£32.2bn) in cash on hand, an amount that he said could conceivably be wiped out in a single day.
"Such a scenario could undermine financial markets and result in significant disruptions to our economy," Mr Lew added.
A heated debate in Washington over the debt ceiling nearly led to default in 2011, rattling financial markets and prompting a major rating agency to downgrade America's credit rating.
Earlier this year, a divided Congress officially missed the deadline for averting $85bn of cuts to defence and other programmes, which had been designed to be so ugly that Washington would be forced to avoid them.
The government has been scraping up against its current $16.7trn (£10.7trn) debt limit since May, but has avoided defaulting on any of its obligations by employing a number of emergency measures to manage its cash, like suspending investments in pension funds for federal workers.
Republicans are considering using the need to raise the debt ceiling as leverage for their agenda in Congress.
Among the party's aims is weakening President Obama's signature healthcare overhaul.
"The debt limit remains a reminder that, under President Obama, Washington has failed to deal seriously with America's debt and deficit," said Michael Steel, a spokesman for House Speaker John Boehner.
While Congress has already taken the tax and spending decisions that have fuelled US budget deficits, it also separately controls the limit on the nation's debt.
However, the President is vowing not to let the debt ceiling be a bargaining chip in other political discussions - suggesting Americans face another anxious wait for a deal.
"We will not negotiate with Republicans in Congress over Congress' responsibility to pay the bills that Congress has racked up, period," White House spokesman Jay Carney said.
The Obama administration has been bolstered by improved tax receipts amid economic recovery but while that has bought some time there is no sign of any compromise in sight.