U.S. Treasury Secretary Timothy Geithner said so-called extraordinary measures the Obama administration is taking to avoid breaching the federal debt ceiling would work only until mid-February to early March and warned that a failure by Congress to raise the limit could “impose severe economic hardship” on the country.
“Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments,” Geithner said in a letter Monday to House Speaker John Boehner and other congressional leaders.
In the letter, released by the Treasury Monday, Geithner said the department will “provide a more narrow range” of dates with a “more targeted estimate at a later date.”
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Republicans in Congress are demanding spending cuts in exchange for raising the $16.4 trillion debt ceiling. President Barack Obama warned them today against using the limit as leverage in the spending debate, saying “markets could go haywire” and government payments, from Social Security checks to military salaries, will be held up if the limit isn’t increased.
“If the extraordinary measures were allowed to expire without an increase in borrowing authority, Treasury would be left to fund the government solely with the cash we have on hand on any given day,” Geithner wrote. “Cash would not be adequate to meet existing obligations for any meaningful length of time because the government is currently operating at a deficit.”
Irreparable Harm
Geithner said failure by the U.S. to meet its payment obligations “would cause irreparable harm to the American economy and to the livelihoods of all Americans. Even a temporary default with a brief interruption in payments that Congress subsequently restores would be terribly damaging.”
In a statement responding to Obama’s comments, Boehner, an Ohio Republican, said the “American people do not support raising the debt ceiling without reducing government spending at the same time.”
“The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved,” Boehner said. “Without meaningful action, the debt will continue to act as an anchor on our economy, costing American jobs and endangering our children’s future.”
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