The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

WASHINGTON (AFP) – The U.S. will hit its statutory debt ceiling in mid-October, raising the chance that the government will be forced to default on its debts, Treasury Secretary Jacob Lew said Monday.

In a letter to Congress, Lew urged legislators to raise the limit from the current $16.7 trillion, saying to not do so “would cause irreparable harm to the American economy.”

The Treasury has been operating under the ceiling since it reached that level on May 17, helped by “extraordinary measures” to manage expenditures, and a surge in tax receipts above forecasts.

However, Lew said, the latest estimates point to that breathing room being exhausted around the middle of October.

“At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day.”

That “would place the United States in an unacceptable position,” Lew said, unable to serve rising commitments to issue payments for health and retirement needs and not able to pay the required salaries.

Moreover, he warned, if investor demand for U.S. government debt declines, the country could face an immediate cash shortfall.

He added: “Indeed, such a scenario could undermine financial markets and result in significant disruptions to our economy.”

Lew said it was not possible to pinpoint the exact day Treasury commitments would exceed its funds.

But, he said, “Under any circumstance… Congress must act before the middle of October.”

Lew’s comments were in a letter addressed to John Boehner, the Republican speaker of the House of Representatives.

It came as the White House and both parties in Congress gird for yet another battle over spending that will conflate the debt ceiling and the U.S. budget.

In repeated battles over the past two years Republicans have stalled increases in the debt ceiling to extract commitments to cut spending from President Barack Obama’s Democrats.

The fight in July-August 2011 took the country to the brink, poised between defaulting on obligations to U.S. citizens or defaulting on foreign debt.

While that fate was averted in a last-minute deal, the budget fight was not resolved and Standard & Poor’s dealt the country the first-ever downgrade of its top-flight debt rating.

Lew evoked that scenario again in his letter to Boehner.

“Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority,” he explained.

He also said: “Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent.”

Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Dr. Anthony Fauci with President George W. Bush in the Oval Office on June 19, 2008

Photo by Wikimedia Commons

Reprinted with permission from AlterNet

Dr. Anthony Fauci, now 80, joined the National Institutes of Health back in 1968 and has worked with a long list of Republican presidents — from Ronald Reagan to George W. Bush to Gerald Ford. But during the COVID-19 pandemic, he has become an object of irrational hatred in the far-right MAGA movement. And journalist Alexander Bolton, in an article published by The Hill on December 1, explains why that hatred has recently become even worse.

Keep reading... Show less

President Joe Biden at the Port of Baltimore

Reprinted with permission from TomDispatch

In mid-October, President Biden announced that the Port of Los Angeles would begin operating 24 hours a day, seven days a week, joining the nearby Port of Long Beach, which had been doing so since September. The move followed weeks of White House negotiations with the International Longshore and Warehouse Union, as well as shippers like UPS and FedEx, and major retailers like Walmart and Target.

Keep reading... Show less
x
{{ post.roar_specific_data.api_data.analytics }}