Lew warns anew of default if US debt ceiling not hiked
AFPWASHINGTON--U.S. Treasury Secretary Jacob Lew on Tuesday branded as unacceptable tactics by Congressional Republicans that could force the government to default on its obligations as soon as next month.
September 26, 2013, 12:05 am TWN
Lew warned anew at the Bloomberg Markets Top 50 Summit in New York that without increasing the Treasury's borrowing ability, by the middle of October it could be left with only a relative small amount of cash and looming large payment commitments.
“It is uncharted territory,” he said of the looming test.
“There is no plan after we run out of borrowing authority that will give us the ability to meet all the obligations of the United States.”
“It is not a line which you cross,” he warned.
Republicans in Congress have refused to increase the country's US$16.7 trillion borrowing ceiling without key budget concessions from the White House.
Lew said the Treasury has managed to operate below that level since it was reached in May via “extraordinary” measures.
But by mid-October, he said, such measures will not hold and the Treasury will have less than US$50 billion in cash, which he said was a “ridiculous position” for the government.
That will not be enough to meet all of the state's commitments, which include salaries, social security payments, debt service, and a host of other obligations.
He said the White House could not give in to the demands of Republicans in the House of Representatives, who want to kill the President Barack Obama's health care reforms by denying them funding in the government budget.
“That is not tactic that can be accepted,” Lew said.
“This president and future presidents cannot be in a position where 50 or 100 members of the House make demands at the risk of default. That's not an acceptable way to work out our differences.”