Lew urges Congress to lift debt limit

[WASHINGTON ] Treasury Secretary Jacob J Lew urged Congress to act now to increase the US debt limit, calling it irresponsible for lawmakers to use political brinkmanship that could jeopardize the government's record of honoring its obligations.

Lawmakers should raise the borrowing threshold unconditionally and not use the ceiling as a political weapon, Mr Lew said Wednesday at a conference in Washington. With less than two weeks to meet his deadline, the Republican-controlled Congress needs to move promptly because the process of increasing the debt ceiling is complicated, he said, reiterating that the government on Nov 3 will exhaust the tools it's using to stay under the cap.

"My job is to make sure that everyone understands the deadline is very real," Mr Lew said, adding that, at that point, the government will be operating on cash, which may not be sufficient to cover all expenses on certain days. Going past that date is "irresponsible," he said.

At Mr Lew's deadline, the Treasury may have less than US$30 billion in cash, while net daily expenses can be as high as US$60 billion, Mr Lew has said. Under circumstances not constrained by the debt ceiling, the Treasury has a policy of keeping a cash balance of at least five days worth of expenditures, or about US$150 billion.

The US debt-ceiling deadlock has already caused disruptions in the Treasury bills market, leading to a shortage of supply. Rates surged in recent days as investors backed away from securities viewed at risk for potential payment delays. Analysts are also concerned the regular sales of three-, 10- and 30-year debt, slated for next month, will be disturbed.

House Republicans discussed options for raising the debt limit at a closed-door meeting on Wednesday as party members remain deadlocked over internal differences.

The chamber may vote on Friday on a bill from Representative Bill Flores of Texas that would set conditions for increasing the limit, including freezing all major rules until 2017. Mr Flores, who heads the Republican Study Committee, a caucus of more than 170 conservatives, said the measure is intended to specifically target energy regulations and rules set by the Dodd-Frank banking law and the Occupational Safety and Health Administration.

President Barack Obama and congressional Democrats have insisted that there be no policy changes attached to a debt- ceiling boost.

BLOOMBERG