U.S. to exhaust borrowing capacity by October 17: Treasury WASHINGTON (Reuters) - U.S. Treasury Secretary Jack Lew warned Congress on Wednesday that the United States would exhaust its borrowing capacity no later than October 17, at which point it would have only about $30 billion in cash on hand. The fresh estimate adds another layer of pressure on lawmakers to raise the $16.7 trillion debt limit and comes as Congress struggles to pass a spending bill to keep the government funded beyond October 1, when the new fiscal year starts. "If the government should ultimately become unable to pay all of its bills, the results could be catastrophic," Lew said in a letter to congressional leaders. The fate of the debt ceiling is up in the air with Democratic and Republican lawmakers once again deeply divided over how to extend the Treasury's borrowing authority. The Republican-controlled House of Representatives, which used the debt ceiling to extract fiscal concessions from Democrats in 2011, is focused on dismantling Obama's health care law in exchange for their debt limit vote. House Republican leaders said there is no decision yet on what might be contained in a debt limit bill that could hit the House floor as early as Friday. But President Barack Obama has said he will not negotiate with Republicans on extending the Treasury's borrowing capacity and Democratic lawmakers are pushing for a clean debt limit raise. A spokesman for Republican House Speaker John Boehner said Lew's warning was "another reminder that we need to work together soon on a bill that raises the debt limit and deals with causes of the debt by cutting Washington spending and increasing economic growth." "It should remind President Obama that refusing to negotiate with Congress on solutions just isn't an option," Boehner's spokesman Michael Steel said. The government has been scraping up against the debt ceiling since May, but it has avoided defaulting on any of its obligations by employing emergency measures to manage its cash, such as suspending investments in pension funds for federal workers. Previously, the U.S. Treasury had said those cash management tools would be exhausted around mid-October, at which time it expected to have $50 billion in cash on hand. In his letter on Wednesday, Lew said the updated estimate reflected fresh information on quarterly tax receipts and the activities of certain large government trust funds. In an attempt to get ahead of the looming debt limit deadline, the Republican-controlled House passed a temporary spending bill that included a provision that would direct the Treasury to pay bondholders and Social Security retirement payments if Congress does not raise the cap on time. Lew dismissed the provision and repeated the administration's position that any plan to prioritize certain government payments over others would be "simply default by another name." "There is no way of knowing the damage any prioritization plan would have on our economy and financial markets," he said. Lew also warned that a repeat of the brinkmanship over the debt limit seen in 2011, which led to a downgrade in the United States' pristine credit rating, would inflict even more harm on the economy now. "If the government should ultimately become unable to pay all of its bills, the results could be catastrophic," he said. Reporting by Timothy Ahmann and Rachelle Younglai; Editing by James Dalgleish and Andrea Ricci