WASHINGTON - The administration is most likely to exhaust the extraordinary measures it can take to avoid reaching the debt limit in late February rather than in March, the Treasury Secretary told congressional leaders in a letter Wednesday.
Those extraordinary measures include halting sales of state and local government series securities (SLGS), which municipal issuers purchase for advance refunding escrows to ensure they will comply with tax requirements.
"When I previously wrote to you in December, I estimated that Treasury would exhaust extraordinary measures in late February or early March, Jacob Lew said in the letter. "Based on our most recent information, we believe that Treasury is more likely to exhaust those measures in late February. While this forecast is subject to inherent variability, we do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time."
The current debt limit is expected to be reached on Feb. 7 without extraordinary measures.
Lew said that the Treasury is expected to experience large net cash outflows in February due to tax refunds. In addition, the amount of borrowing capacity that can be provided by the extraordinary measures is significantly more limited than in previous years, he said.
"Protecting the full and credit of the United States is the responsibility of Congress, because only Congress can extend the nation's borrowing authority. No Congress in our history has failed to meet that responsibility," Lew said in the letter. "I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit before Feb. 7, 2014, and certainly before late February."
