Treasury secretary calls on Congress to raise debt limit

The seal of the Treasury Department is seen in this undated picture. CBS

Treasury Secretary Jack Lew on Thursday urged Congress to "avoid another unnecessary self-inflicted wound" and raise the nation's borrowing limit before the Treasury Department officially exceeds it.

Failing to do so, Lew warned in a speech to the Commonwealth Club of California in San Francisco, would have "disastrous effects for our nation. We cannot afford for Congress to wait until some unknowable last minute to resolve this matter on the eve of a deadline."

Currently, the debt limit stands at $16.69 trillion. The national debt has already exceeded that, but the public debt that is subject to the debt limit is just under the limit, by about $25 million.

Lew explained in his speech that raising the statutory borrowing limit has nothing to do with new spending. "It has to do with spending that Congress has already approved and bills that have already been incurred," he said. "Failing to raise the debt limit would not make these bills go away."

Congress found itself embroiled in an ugly fight over the debt limit in the summer of 2011 -- to the detriment of the economy and Congress' approval ratings. If Congress ever failed to raise the debt limit, the nation could potentially default on its debt, which Lew reminded his audience would have disastrous consequences.

The debt limit is one of the significant budget issues facing Congress when it returns to Washington next month. The White House and congressional Democrats insist there will be no negotiating over the debt ceiling this time around, but Republicans earlier this summer suggested they'd use the issue as leverage in negotiations over government spending.

"We need significant cuts in spending if we are going to replace the sequester and extend the debt limit," House Speaker John Boehner, R-Ohio, said last month.

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