Beset with debt
Treasury pleads for prompt increase to limit Raising the debt limit is threatening to become a political battlefield this spring with lawmakers trying to extract political concessions by playing chicken with the nation’s creditworthiness. Treasury secretary Timothy Geithner is desperately trying to insure that doesn’t happen.
The congressional leadership asked when that debt limit would be reached. Geithner’s reply was straightforward: Somewhere between March 31 and May 16, depending on the economy and tax receipts. He, of course, would like to see the limit raised well before that.
Then Geithner went on at some length, beginning with the observation that, “Never in our history has Congress failed to raise the debt limit when necessary.” Failure to do so, he wrote, would put the U.S. government in default, unable to make good on its economic obligations, and even if of short duration would have “catastrophic economic consequences that would last for decades.”
The consequences would include millions of job losses, sky-high interest rates on everything from mortgages to student loans, a recession far worse than the one we’re just coming out of and the erosion of U.S. standing in the world to banana republic status.
In a pinch, the Treasury could delay default for several weeks by suspending payments to certain accounts and juggling the funds in others, but Geithner told the leadership, “Treasury would prefer not to have to engage again in any of these extraordinary measures.”
Trying, perhaps vainly, to defuse the politics of the issue, Geithner noted that the financial obligations that Treasury must borrow to pay were legally incurred by both Democratic and Republican presidents and Congresses. “Responsibility for creating the debt is bipartisan, and responsibility for meeting the nation’s obligations must be shared both parties,” Geithner concluded.
Scripps Howard News Service