US faces October deadline to raise debt limit or government 'will run out of money'

US Treasury Secretary warns in letter that administration is running out of accounting maneuovers to avoid hitting borrowing limit

US 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 House of Representatives Speaker John Boehner released today that the government is running out of accounting maneuovers it has used to avoid hitting the borrowing limit. Lew pressed Congress to act so Treasury can keep paying the government's bills.

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.

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.

Lew told CNBC in a Tuesday 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.

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 helped.

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 their August 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 and says Congress should fund the spending it has previously approved.

Many Republicans want to use upcoming budget deadlines to mount an assault on Obama's signature health care law.

Lew told CNBC the administration would not accept a delay or defunding of parts of the law, which aims to help millions of uninsured people gain health insurance coverage.

AP

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: IT Project Coordinator / Manager

£25000 - £40000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Trainee Vehicle Inspectors / Purchasers

£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...

Recruitment Genius: Vehicle Broker / Purchaser

£18000 - £45000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'