The Treasury Department has informed Congress that the country will bump up against the debt ceiling by mid-October. The current ceiling stands at $16.7 trillion.
"Congress should act as soon as possible to meet its responsibility to the nation and to remove the threat of default," he wrote. "Under any circumstance - in light of the schedule, the inherent viability of cash flows, and the dire consequences of miscalculation - Congress must act before the middle of October."
Lew's deadline would set up a crucial few weeks for the White House and Congress when lawmakers return to Washington next month. The government will shut down on Oct. 1 unless Congress approves a measure to keep it funded. Only nine legislative days are scheduled in September.
Shortly after Lew's letter became public, the White House reiterated its stance on raising the debt limit - it is not up for debate.
"Let me reiterate what our position is, and it is unequivocal - we will not negotiate with Republicans in Congress over bills Congress has racked up," said White House Press Secretary Jay Carney. "We have never defaulted and we must never default."
Meanwhile, a spokesman for Speaker John Boehner (R-Ohio) fired back, saying the debt limit is "a reminder that, under President Obama, Washington has failed to deal seriously with America's debt and deficit."
Republicans have signaled an interest in joining the debate over government funding with the debate over raising the debt ceiling, which could give the party more leverage in talks with the White House.
Boehner told his conference Thursday that he wanted to advance a short-term continuing resolution to keep the government funded for one or two months. The measure would be set at the level of the sequester, which imposed automatic spending cuts on the government.
Conservative members want to use the government funding measure to defund ObamaCare, a move Boehner has not embraced.
Democrats want to replace sequester spending cuts with a mix of revenue increases.
This time, it looks like we're going over the cliff. With Obama dead set against negotiating a rise in the debt limit and Republicans dead set on using the debt limit to wring concessions on spending from Obama, someone, somewhere is going to have to give in to the other side or we really are going to find out what happens when the government hits the debt ceiling. Some say it won't be too bad, others think it will be catastrophic. Regardless, whoever gives in will be damned by their base for it.
It's impossible to predict, but there have already been behind the scenes talks between the House and Obama and it could be a deal will be reached sooner than most of us think. It almost certainly would satisfy no one and would be a temporary fix, thus setting the stage for another brawl a few months down the road.