Lew to Congress: US hits debt limit on March 16, needs to be raised ASAP

US hits debt limit March 16th: Sec. Lew
US hits debt limit March 16th: Sec. Lew   

Treasury Secretary Jack Lew warned Congress that the U.S. will hit its statutory debt limit on March 16, setting up another potential showdown between lawmakers and the White House over spending.

In a Friday morning letter to House Speaker John Boehner and other House and Senate leaders, Lew said that his office will be forced to suspend the issuance of State and Local Government Series securities on Mar. 13 unless the debt limit is raised.

The U.S.'s top finance official said the U.S. will hit its debt limit on Mar. 16, but would begin taking "extraordinary measures" to finance the government on a temporary basis, according to the U.S. Treasury.

"Accordingly, I respectfully ask Congress to raise the debt limit as soon as possible," Lew wrote in his letter.

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The debt ceiling, which has been raised 74 times in the last five decades, is a perennial political football in Washington. Under President Barack Obama, the limit has been hiked five times, fewer than either of his immediate predecessors George W. Bush and Bill Clinton.

Still, Lew's warning comes as deficit hawks point out the government pulled in record amounts of tax receipts last year. Separately, the budget deficit—while projected to hit its lowest since 2007 this year by the Congressional Budget Office—still hovers around 2.5 percent of gross domestic product.

The Treasury secretary emphasized that "increasing the debt limit does not authorize new spending commitments," but rather "simply allows the government to pay for expenditures Congress has already approved."

Congress passed the Temporary Debt Limit Extension Act in February 2014, which suspended the statutory debt limit through Mar. 15 of this year.

The U.S. legislature is expected to face another contentious debate over raising the U.S. legal borrowing authority. If it stretches to the final deadline, the timing would coincide with the debate over government agency funding for the new fiscal year, which starts Oct. 1.

The Congressional Budget Office said this week that if Congress does not raise the federal debt limit, the Treasury Department will exhaust all of its borrowing capacity and run out of cash in October or November, slightly later than a previous forecast.

In 2011, a debt limit standoff in Congress brought the United States close to an unprecedented debt default before it was resolved with a budget deal that put in place automatic spending constraints that last through 2021.

—Reuters contributed to this report.

CORRECTION: This story was updated to reflect the Treasury is asking Congress to raise the debt limit.