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New debt ceiling deadline in October

A new fight over raising the federal debt limit is likely in coming weeks as the U.S. government edges closer to default

A new fight over raising the federal debt limit is likely in coming weeks as the U.S. government edges closer to default.

Treasury Secretary Jack Lew notified congressional leaders in an Aug. 26 letter that the "extraordinary measures" the Treasury Department began to implement in mid-May when the government reached its statutory debt limit will soon run their course and be exhausted, leaving the Treasury only with the cash it has on hand—and no borrowing authority—to cover the 80 million payments the department must make every month.

Based on current estimates, Lew said, the department estimates that those extraordinary measures will be exhausted in mid-October.

In his letter, Lew alluded back to a similar missive he sent to top lawmakers in May on reaching the debt limit, noting: "As I stated in that letter, Congress should act as soon as possible to protect America's good credit by extending normal borrowing authority well before the risk of default becomes imminent."

Relying only on cash on hand, Lew said, "would place the United States in an unacceptable position."

"A cash balance of approximately $50 billion would be insufficient to cover net expenditures for an extended period of time. And, on certain days, net expenditures could exceed such a cash balance," he wrote.

"Under any circumstance—in light of its schedule, the inherent variability of cash flows, and the dire consequence of miscalculation—Congress must act before the middle of October," Lew concluded.

To see the letter, go to: www.treasury.gov/initiatives/Documents/082613%20Debt%20Limit%20Letter%20to%20Congress.pdf.

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