WASHINGTON: Treasury Secretary Jacob Lew has warned that the US could be on path of default if the Congress did not increase the nation’s borrowing limit by late February. In a letter to the Congress, Lew said the Treasury would hit the borrowing limit by February 7 and by taking some extraordinary measures, it can avoid default by late February.
The current US debt limit stand at USD 17.3 trillion. “I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit before February 7, 2014, and certainly before late February,” Lew said in his letter to the top Congressional leadership.
The length of time that the extraordinary measures can extend the nation’s borrowing authority is significantly shorter than it was in 2011 and 2013, he said, adding this is in large part because the government experiences large net cash outflows in the month of February, due to tax refunds.
Moreover, this year the payment of tax refunds will be particularly concentrated in the weeks after February 7 due to the delayed start of the tax filing season, which was caused by the government shutdown, he wrote.
“Protecting the full faith and credit of the US is the responsibility of Congress, because only Congress can extend the nation’s borrowing authority. No Congress in our history has failed to meet that responsibility, Lew wrote.
Bureau Report
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