Treasury Secretary Jack Lew sent a letter to Congress last week with a stark warning: “If you thought that you had until the end of the fall to raise the debt limit, you were wrong.”
Little more than six months after the last time Congress raised the federal debt limit – the latest suspension of the limit was set at about $18.15 trillion – the government is once again forced to lift the level permissible for borrowing when it likely hits the debt ceiling in early November.
The Fiscal Times labeled Lew’s latest warning on the debt limit a “bombshell,” but it was in fact consistent with the earlier time frame Lew had warned of previously. In his letter, Lew said as much:
On July 29, I wrote to inform you that the extraordinary measures we have been employing to preserve borrowing capacity would not be exhausted before late October, and that they likely would last for at least a brief additional period of time. That continues to be our view, based upon our best and most recent information.
We have a troubling dynamic on the debt limit. In recent years, lawmakers seem to have interpreted Lew’s warnings to mean that the outer limit on the range of dates when the debt limit might be breached is the “true” deadline for action. This is an extraordinarily dangerous assumption.
When tax receipts come in below estimates, as they have this quarter, the earlier date in the range provided by Lew is the more likely to be when the limit would be breached. That means that Congress will have to figure out a way to adjust the limit this month, even with the backdrop of the House Republican leadership elections and a nascent revolt among some elements of the Republican conference against the very idea of raising the limit.