US treasury secretary Jack Lew said that he will resort to using emergency measures after 7 February to avert the first-ever default on the national debt. He added that he expects to exhaust those measures quickly unless Congress acts quickly to raise the US debt limit.
The temporary suspension of the debt limit passed by Congress last year expires before this weekend, and Lew warned that the Treasury could only stave off a default through accounting measures such as deferring trust fund investments for a ‘brief span of time’. He expected any such manouevering room would run out by the end of this month.
Lew’s statement urged Congress to act quickly to increase the US debt limit so that the government could borrow the money needed to keep functioning, warning that delayed action could have serious financial consequences.
Last autumn’s debt stand-off, which saw a government shutdown over the first two weeks of October triggered a sharp drop in consumer confidence and unsettled financial markets. Lew stressed that only Congress could increase the government’s borrowing authority, and “no Congress in the history of the United States has failed to meet this responsibility.”
Anticipating a Republican argument that raising the debt limit should be tied to spending cuts, Lew reminded Congress that the debt limit is about “paying bills that have already been incurred,” and that refusing to raise the ceiling would not make the bills go away.
The statement also reminded Congressional Republicans that House Speaker John Boehner said that not only should the US never default on debt, but it “shouldn’t even get close to it.”
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