The U.S. treasury is expected to reach its debt limit in mid-October, CNBC reports.
This is much “sooner than many on Capitol Hill had anticipated,” sources familiar with the situation said.
“Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent,” Treasury Secretary Jack Lew said in a letter to congressional leaders.
He continued, arguing that raising the borrowing limit does not necessarily lead to an increase in spending. Instead, he explained, it merely allows the Treasury to “pay expenditures Congress has previously approved.”
“If investors should become unwilling to loan the United States money, the United States could face an immediate cash shortfall,” Lew said.
The 2011 fight over the debt ceiling hurt markets and eventually led to the March 1 automatic spending cuts (i.e. “sequester”).
Treasury Secretary Jack Lew in May said the debt ceiling probably wouldn’t be reached until September.
“People shouldn’t relax, Congress should deal with this right away. The uncertainty caused by putting this off is not good. The anxiety caused to the U.S. and world economy by putting this off until the last minute is not good,” Lew said at the time.
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Featured image Getty Images. This post has been updated.