Lew says Congress shouldn’t wait til last minute to raise debt limit

In the wake of a new, earlier deadline to raise the debt limit, Treasury Secretary Jacob J. Lew warned lawmakers Thursday that they needed to move quickly to increase the nation’s borrowing authority or risk damaging the strengthening economy.

“They should act as soon as possible. They shouldn’t wait until the last minute,” Lew told CNBC-TV in an interview from Davos, Switzerland, where he is attending the annual World Economic Forum.

“Congress should just get it done and they should get it done without a lot of stress to the U.S. or the world economy,” he said.

QUIZ: Test your knowledge about the debt limit

On Wednesday, Lew formally told congressional leaders that they had less time to act then originally thought and must raise the $16.7-trillion debt limit by late February.

The debt limit was suspended last fall until Feb. 7, when it will be reinstated. At that point, the Treasury can use so-called extraordinary measures, such as suspending investments in some federal pension funds, to continue borrowing.

But those measures will buy less time than the Treasury estimated just a few weeks ago. Instead of lasting until early March, funds will run out by late February, according to new calculations that factor in tax refunds the government expects to send out next month.

Democrats and Republicans agree the debt limit should be raised to avoid a potential federal default and another downgrade of the U.S. credit rating. But a standoff looms because Republicans want to offset an increase with spending cuts and President Obama says he will not negotiate.

Lew said he sent the letter so Congress would be fully informed about when it needs to act.

And with a slew of economic indicators pointing to stronger growth this year, Lew said Thursday that lawmakers should raise the debt limit to avoid damage.

“We’re doing pretty well in the U.S. economy,” he told CNBC. “We’ve got some tail winds … we have to make sure there are no more self-inflicted wounds.”

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