Obama Treasury Secretary: US Could Default on Debt at End of Month
Well this ought to calm the markets…
Treasury Secretary Jack Lew told the Bipartisan Policy Center today the US may default on its debt at the end of the month.
The BBC reported:
US Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.
Mr Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on 7 February.
But he anticipated the treasury’s reserves would quickly be exhausted as it issues annual income tax refunds.
Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.
The $16.7tn (£10.2tn) cap will be reinstated on Friday.
“Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government,” Mr Lew said at the Bipartisan Policy Center in Washington on Monday.
The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.