The government will only be able to borrow money up through mid-October before the Treasury Department runs out of room and bumps up against the legal limit on U.S. debt, Secretary Jack Lew informed Congress on Monday.
That notification starts the clock ticking on yet another deadline debt fight, which also coincides with the annual battle over spending bills, which must be passed before the end of September.
House Republicans say both fights offer them leverage to try to extract more concessions from President Obama on curbing his health care law or cutting elsewhere in the federal government.
But after losing ground in several previous deadline spending and debt battles, Mr. Obama and Democrats have vowed not to negotiate on either the debt or spending this time around. And the administration is making it clear it will blame Congress if a stalemate ensues.
“Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority,” Mr. Lew said in his letter notifying Congress. “Failure to meet that responsibility would cause irreparable harm to the American economy.”
Bumping up against the debt limit would mean the government could no longer borrow and would be able to pay out only whatever cash it has on hand from tax money coming in.
Based on the numbers so far this year, that would amount to a 21 percent cut in spending, which would come on top of the budget sequesters that kicked in earlier this year.
Republicans are debating how far to push on the debt limit, and House Speaker John A. Boehner has said his red line remains in place: demanding a dollar in spending cuts for every dollar of increase in the debt limit.
For their part, Democrats have complained that the congressional schedule doesn’t leave much time for action anyway. Congress doesn’t return from a five-week summer vacation until the week of Sept. 9, and the House has another vacation planned to coincide with Jewish holidays.
“With just nine legislative days currently scheduled in September, Republicans must return to Congress prepared to move beyond the kind of brinksmanship that undermined our economic recovery two years ago,” said Rep. Sander M. Levin of Michigan, the ranking Democrat on the Ways and Means Committee.
The debt stood at $16.738 trillion as of Friday, which is the most recent figure released by the Treasury Department. It has hovered around that figure for three months.
Earlier this year, facing another debt deadline, Congress and Mr. Obama agreed to a one-time suspension of the debt limit, in exchange for an agreement that both the House and Senate pass budgets for fiscal 2014.
Both chambers complied — but since then they’ve stalemated over a joint compromise, leaving them $90 billion apart in their blueprints. Both chambers have now begun to write spending bills at their own numbers, meaning they are unlikely to be able to reach a compromise before the Sept. 30 deadline for the 2014 spending bills to be done.
Meanwhile, the debt-limit suspension expired in mid-May, and since then the government has been using extraordinary measures to keep from breaching the limit set in law.