Lew presses Congress on debt cap

Stopgap measures to run out in less than 3 weeks, letter says

Saturday, February 8, 2014

WASHINGTON - Treasury Secretary Jacob Lew said Friday that U.S. borrowing authority might not last past Feb. 27 and urged Congress to raise the debt ceiling as soon as possible.

Extraordinary measures begun Friday by the Treasury to remain under the debt limit “are likely to be exhausted in less than three weeks,” Lew said in a letter to House Speaker John Boehner, R-Ohio.

House Republicans have said they want concessions in exchange for raising the debt limit, though they’ve been unable to agree on exactly what.Republicans are floating options that include averting cuts in Medicare payments to doctors and restoring cost-of living adjustments for military retirees that were reduced in a December budget deal, said three House Republican aides who spoke on condition of anonymity.

A suspension of the U.S. debt limit, enacted by Congress in October, expired Friday. Lawmakers haven’t ruled out a debt-limit boost without conditions, if Republicans are unable to garner support for an offset.

House Majority Leader Eric Cantor’s schedule for House votes for the week starting Monday includes possible consideration of legislation related to the debt limit. No bill has been introduced. Congress plans to be out of session the week of Feb. 17 and plans to return the week of Feb. 24.

“It would be a mistake to wait until the last possible minute to act,” Lew said in his letter to Boehner. After the extraordinary measures run out, any “cash balance would be exhausted quickly,” he said.

Business groups are encouraging lawmakers to act to raise the debt limit, while Democrats including President Barack Obama and Senate Majority Leader Harry Reid of Nevada insist it be raised without conditions.

“Any default by the federal government on its debts would cause devastating, long-lasting effects for all Americans,” the Business Roundtable, which represents major U.S. company chief executive officers, wrote in a letter to congressional leaders released Friday.

Taking the government “to the precipice would foster uncertainty, dampen consumer and business confidence, risk higher borrowing costs, and could have immediate consequences for hiring and investment,” wrote Randall Stephenson, chairman of AT&TInc., and Louis Chenevert, chairman of United Technologies Corp.

Stephenson is president of the Business Roundtable and Chenevert leads the group’s tax and fiscal policy panel.

The Treasury Department suspended sales of its state and local government series of nonmarketable securities Friday at noon New York time. The securities, called “slugs,” are sold to states and municipalities so they can comply with U.S. tax laws and arbitrage rules when they have money to invest from their issuance of tax-exempt bonds.

After the extraordinary measures run out, the Treasury will be left with about $50 billion in cash, Lew said.

“That number, however, could be materially higher or lower, depending on the pace of tax-refund filings,” Lew said. “In previous years, the Internal Revenue Service has issued as much as $10 [billion]-$15 billion in refunds on a single day and nearly $40 billion in a single week.”

Lew also said government expenditures can be as high as $60 billion on certain days.

Republicans haven’t been able to find sufficient votes for at least four plans floated in the past week as conditions for raising the debt limit.

Rep. Mac Thornberry, R-Texas, vice chairman of the House Armed Services Committee, said Thursday that the idea of restoring military benefits probably wouldn’t be included in a final measure because the change would increase debt.

Other options, since abandoned, included repealing an insurance provision of Obama health-care law and mandating approval of the TransCanada Corp. Keystone XL pipeline.

“There’s no reason to drag this out any longer,” Senate Budget Committee Chairman Patty Murray, D-Wash., said in a statement Friday. “Republicans should accept that they’re not getting a ransom out of their brinkmanship and agree to do the right thing for our economy by allowing the United States to pay its bills on time.”

A debt-limit increase without conditions, which would need a significant number of Democratic votes, remains a last-ditch option, according to three senior Republican aides who spoke earlier this week on condition of anonymity.

“We’re still looking for the pieces to this puzzle,” Boehner said Thursday, joking that he’d have trouble finding enough Republican votes for a debt-ceiling increase even if sainthood for Mother Teresa were attached.

“We need Democratic support in order to pass it,” Boehner said. “We’ve got broad support in our caucus, but I don’t think we have 218 votes.” Information for this article was contributed by Ian Katz and Kathleen Hunter of Bloomberg News.

Front Section, Pages 4 on 02/08/2014