WASHINGTON — Unless Congress raises the debt ceiling, the Treasury Department said on Monday that it expected to lose the ability to pay all of the government's bills in mid-October.
That means a recalcitrant Congress will face two major budget deadlines only two weeks apart, since the stopgap "continuing resolution" that finances the federal government runs out at the end of September.
Members of Congress are sharply divided over what to include in measures financing the government and raising the debt ceiling.
Some Republican lawmakers have said they want to see an increase in the debt limit paired with other measures to decrease the deficit. "We're not going to raise the debt ceiling without real cuts in spending," Speaker John A. Boehner of Ohio told reporters last month.
Republicans have also floated the idea of insisting on delaying parts of the Affordable Care Act as part of any deal.
But on Monday, the White House again said it would not allow Republicans to use the debt ceiling as political leverage in negotiations this fall. "Let me reiterate what our position is, and it is unequivocal," said Jay Carney, the White House press secretary. "We will not negotiate with Republicans in Congress over Congress' responsibility to pay the bills that Congress has racked up, period."
The debt ceiling stands at about $16.7 trillion. Congress passed a measure increasing it by about $300 billion in January.
Congress will also wrangle over how to keep the federal government's lights on. The White House and many members of Congress want to try again for a broader deficit-reduction deal, which might replace the $85 billion in mandatory cuts known as the sequester with a different package of cuts, including changes to social programs and perhaps tax increases.
"The president has put forward a clear compromise proposal, a broad compromise proposal that would reduce the deficit significantly, including through savings in our entitlement programs, in a balanced way," Mr. Carney said on Monday. "We continue to await a response."
Administration officials are again warning about the havoc Congress might unleash by failing to raise the debt ceiling.
The Treasury would be able to spend money only as it came in. It might be forced to choose certain payments over others — paying bondholders but not Social Security recipients, for instance. Some analysts question whether the government's payment systems could even handle such prioritization.
"The rate at which cash will be drawn down depends on factors that are inherently variable and irregular," Treasury Secretary Jacob J. Lew said in a letter Monday to Mr. Boehner imploring the House to act on the debt ceiling before mid-October. "If investors should become unwilling to loan the United States money, the United States could face an immediate cash shortfall. Indeed, such a scenario could undermine financial markets and result in significant disruptions to our economy."
The government officially bumped up against its borrowing limit in May. At that point, the Treasury stopped issuing new debt and started employing "extraordinary measures" to ensure that the government had enough cash to make its required payments. But those measures bought only so much time.
If the continuing resolution were to expire without a new patch or appropriations bill, the federal government would shut down, with thousands of employees put on furlough and only essential services, like air traffic control, continuing.