Lew urges US government debt ceiling increase

27 Aug 13
US treasury secretary Jack Lew has warned Congress that it must raise America’s statutory debt ceiling before October to prevent the government running out of money.

By Mark Smulian | 27 August 2013

US treasury secretary Jack Lew has warned Congress that it must raise America’s statutory debt ceiling before October to prevent the government running out of money.

He said Congress must act as soon as possible to avoid jeopardising the US’s credit rating and the economically harmful consequences of a default, or the threat of one.

The issue of America’s borrowing limit is caught up in political disputes between the Obama administration and the House of Representatives, which is controlled by the opposition Republican party.

Lew said in a letter to House of Representatives speaker John Boehner that, without permission to borrow more, the Treasury would hit the borrowing limit, set at $16.7tn, in mid-October. This would mean the government would be left to fund all its programmes ‘with only the cash we have on hand on any given day’, he warned.

That amounted to some $50bn, but would be uncertain since tax revenues and spending demands were unpredictable.

He wrote: ‘Operating the government with no borrowing authority, and with only the cash on hand on a given day, would place the United States in an unacceptable position.

‘Extending borrowing authority does not increase government spending; it simply allows the Treasury to pay for expenditures Congress has previously approved.’

Speaking earlier at an event in California, Lew said: ‘We cannot afford for Congress to wait until some unknowable last minute to resolve this matter on the eve of a deadline. We cannot afford another unnecessary self-inflicted wound.’

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