POLITICS
09/25/2013 09:17 am ET Updated Sep 25, 2013

Jack Lew To Congress: Debt Limit Will Be Reached On Oct. 17

WASHINGTON -- The debt ceiling will be reached Oct. 17 and the Department of the Treasury will have less cash on hand than it previously estimated, said Secretary Jack Lew in a letter released Wednesday.

"Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30 billion to meet our country's commitments," he said in a letter to House Speaker John Boehner (R-Ohio). "This amount would be far short of net expenditures on certain days, which can be as high as $60 billion."

Lew said in the letter, which was released to the media, that the Treasury had estimated in August that it would have $50 billion on hand to fund current obligations.

The letter ratchets up the pressure on Congress to pass a bill raising the statutory borrowing authority of Congress. Congressional Democrats and President Barack Obama have vowed not to negotiate on the debt ceiling. House Republicans, meanwhile, have floated a number of provisions attached to a debt-ceiling hike, including a one-year delay of the Obamacare individual mandate and language backing the construction of the controversial the Keystone XL pipeline.

The Lew letter rejects an approach by House Republicans to prioritize payments to bondholders in an effort to avoid a shutdown. "Any plan to prioritize some payments over others is simply default by another name," it says. "The United States should never have to choose, for example, whether to pay Social Security to seniors, pay benefits to our veterans, or make payments to state and local jurisdictions and health care providers under Medicare and Medicaid. There is no way of knowing the damage any prioritization plan would have on our economy and financial markets."

The United States reached its borrowing limit of $16.7 trillion on May 19, but since has been using "extraordinary measures" to fund the government's obligations.

Lew warned that another debt-ceiling standoff would harm the economy, similar to the damage caused by the 2011 showdown over the debt ceiling between congressional Republicans and President Barack Obama.

Worries over the debt ceiling have already led markets to fall in recent days. The longer brinksmanship continues, the greater the chance that markets will destabilize further.

Read the full letter here.

This story has been updated.

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