Skip to main content

Treasury gears up to buy time under reimposed debt cap

The Obama administration on Friday notified Congress it was prepared to take a series of steps to free up about $260 billion so it can keep paying the nation's bills once a temporary suspension in the government's debt ceiling lapses this weekend.

To preserve its borrowing capacity, the Treasury Department said it would employ the same measures it has used previously when Congress had failed to raise the limit, including halting investments in two different federal employee pension funds.

In a letter to congressional leaders, Treasury Secretary Jack Lew said the extraordinary actions should allow the government to meet all its obligations at least through the September 2 Labor Day holiday.

If the debt ceiling is not raised by then, he said the nation would run the risk of an economically damaging default.

"Congress should act sooner rather than later to protect America's good credit and avoid the potentially catastrophic consequences of failing to act until it is too late," Lew said.

Republicans in Congress want to use the need to raise the borrowing cap as leverage to seek fresh budget cuts and tax code changes. President Barack Obama has said any deal to cut the budget deficit would need to include additional revenues, an idea that is anathema to many conservatives.

In 2011, the Obama administration and Congress battled for months before raising the debt ceiling to $16.4 trillion. The fight hurt consumer confidence, shook financial markets and cost the United States its top-tier credit rating.

Earlier this year, Congress decided to side step a messy fight and put in place legislation that suspended the limit.

When that suspension expires on Sunday, the new ceiling will be set at the existing level of the nation's debt, which is around $16.7 trillion.

It will also set the clock ticking toward another potential bitter showdown over the budget this summer.

"In order to avoid a repeat of the damaging brinkmanship that occurred in 2011, Congress should remove the threat of default by taking this action as soon as possible," Lew said.

The Treasury took the first step to free up borrowing authority this week with a decision to suspend sales of special Treasury securities that state and local governments use to temporarily invest proceeds from sales of municipal bonds.

In addition to that step, and the possibility of putting a temporary halt to pension fund investments, the Treasury said it could dip into a seldom-used fund it taps to intervene in currency markets.

It ruled out some other measures, including halting sales of savings bonds.

Normally, these measures would buy the Treasury about two months before it would run out of cash. But unexpectedly strong tax receipts and sizable bailout payments from mortgage finance firms Fannie Mae and Freddie Mac are giving the Treasury more time.

While Lew said the measures would buy time until at least early September, many private forecasters believe the drop-dead date will not be reached until October and the non-partisan Congressional Budget Office estimates it could be as late as November.

(Reporting by Margaret Chadbourn; Editing by Neil Stempleman and Tim Ahmann)

Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o