(MENAFN - AFP) The US will hit its statutory debt ceiling in mid-October, making it hard for the government to meet all of its obligations after that, Treasury Secretary Jacob Lew said Monday.
In a letter to Congress, Lew urged legislators to raise the limit from the current 16.7 trillion, saying to not do so "would cause irreparable harm to the American economy."
The Treasury has been operating under the ceiling since it reached that level on May 17, helped by "extraordinary measures" to manage expenditures and a surge in receipts above forecasts.
However, Lew said, "Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October.
At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day."
That "would place the United States in an unacceptable position," Lew said, unable to serve rising commitments to issue payments for health and retirement needs and not able to pay the required salaries.
Moreover, he warned, if investor demand for US government debt declines, the country could face an immediate cash shortfall.
"Indeed, such a scenario could undermine financial markets and result in significant disruptions to our economy."