WASHINGTON - Treasury Secretary Jacob Lew has told Congress that the government will run out of money to pay its bills in mid-October unless lawmakers raise the country's borrowing limit, which is capped at $16.7 trillion.
Lew said in a letter to Speaker John Boehner released Monday that the government is running out of accounting maneuvers it has used to avoid hitting the borrowing limit. He pressed Congress to act so Treasury can keep paying the government's bills.
Lew said it's impossible for Treasury to predict exactly when borrowing limit will be reached. But he warns that if action isn't taken soon, the government could be left with $50 billion in cash by mid-October. He says that wouldn't be enough to cover Social Security payments, military personnel salaries, Medicare and other programs for an ``extended period.''
Lew told CNBC in a Tuesday morning interview that there cannot be any question that the United States is a country that pays its bills.
``It's not as if we get to go back and undo the commitments we made,'' he said. ``These are old bills that have to be paid.''
Earlier this year, Congress temporarily suspended the borrowing limit so lawmakers could focus on other budget debates. Treasury has kept the government operating for several months through its bookkeeping maneuvers. A smaller deficit this year has also helped.
The government is spending more than it takes in, running up annual deficits in excess of $1 trillion in each of the past four budget years. It has been borrowing the difference to meet its obligations.
Republicans want to reduce future deficits by cutting back sharply on spending. Democrats have proposed a mix of spending cuts and tax increases, which Republicans strongly oppose. The issue awaits resolution when lawmakers return from the recess.
Congress last passed legislation to increase the borrowing limit in the summer of 2011 after a months-long negotiation between President Barack Obama and top lawmakers like Boehner. Republicans forced Obama to accept about $2 trillion in spending cuts over the coming decade in exchange for a like-sized increase in the borrowing limit.
Obama says he won't negotiate on the debt limit this time around and says Congress should fund the spending it has previously approved.