Treasury Secretary Lew: Raise the Debt Limit Now

The U.S. will hit its debt limit on March 16 but with some  "extraordinary measures" it will be able to fund the government on a temporary basis, according to U.S. Treasury Secretary Jack Lew, who urged Congress in a letter to raise the debt limit immediately.

In the letter to House Speaker John Boehner and other House and Senate leaders, Lew said on March 13 his office would have to suspend the issuance of some local and and state securities, reports CNBC.

"Accordingly, I respectfully ask Congress to raise the debt limit as soon as possible," Lew wrote in his letter.

In the letter, Lew assured that increasing the debt limit did not necessarily mean approving new spending but instead allowed the federal government to pay for existing expenses.

His letter came on the heels of a a Congressional Budget Office report Tuesday that said if the U.S. federal debt limit is not raised, the U.S. Treasury Department will exhaust all of its borrowing capacity and run out of cash in October or November, slightly later than a previous forecast.

Normal U.S. borrowing authority under the debt limit is due to expire on March 15. If Congress fails to raise or extend the debt limit, Treasury will need to begin employing extraordinary cash management measures to continue borrowing.

Previously, the CBO had said these measures would allow Treasury to meet U.S. obligations until September or October.

In a new report to Congress as the debt limit expiration approaches, the non-partisan budget referee agency said strong revenues from tax payments in April and June will allow the Treasury to finance normal government operations for several months despite a projected deficit of nearly $500 billion for the 2015 fiscal year.

It estimated that the Treasury's extraordinary measures, which range from suspending investments in government employee pension funds to halting sales of debt securities to state and local governments, would provide nearly $363 billion in additional borrowing capacity.

Once that capacity is exhausted, CBO said the borrowing cap "would ultimately lead to delays of payments for government activities, a default on the government's debt obligations, or both."

Congress is expected to face another contentious debate over raising the debt limit this year, and if it stretches to the final deadline, the timing would coincide with the debate over government agency funding for the new fiscal year, which starts Oct. 1.

In 2011, a debt limit standoff in Congress brought the United States close to an unprecedented debt default before it was resolved with a budget deal that put in place automatic spending constraints that last through 2021.