US Treasury Department urges Congress to raise federal debt ceiling

US Treasury Department urges Congress to raise federal debt ceiling

Washington, July 13 (IANS) The US Treasury Department has urged Congress to raise the federal debt ceiling before lawmakers leave for the August recess, warning that the department will exhaust its cash by early September.

“Based on updated projections, there is a scenario in which we run out of cash in early September, before Congress reconvenes,” Treasury Secretary Steven Mnuchin said in a letter on Friday to House Speaker Nancy Pelosi.

“As such, I request that Congress increase the debt ceiling before Congress leaves for summer recess,” he said.

To prevent the nation from defaulting on its obligations as Congress is deliberating on an increase of the debt limit, the Treasury Department has the authority to exercise the so-called “extraordinary measures” to keep government agencies running, reports Xinhua news agency.

Those measures, according to an explanation issued by the department in March, include suspending the sales of Treasury securities issued to state and local government entities, as well as halting new investments and reinvestments in a number of government funds.

“Since there is a reasonable uncertainty in projecting government cash flows, it is impossible to identify precisely how long extraordinary measures will last,” Mnuchin told Pelosi in the letter.

Pelosi said on Thursday that she was “convinced” Congress should act on the debt ceiling before lawmakers leave on July 26 for a six-week recess.

“I am personally convinced that we should act on the caps and the debt ceiling prior to recess,” Pelosi told reporters after speaking by phone with Mnuchin. “I’m realistic,” she added.

The Treasury Secretary said last month that if the White House and Congress fail to agree on a spending plan, the administration would offer a continuing resolution to keep the government funded at its current levels for a year.

Speaking to reporters on June 19 after a meeting between White House officials and congressional leaders at Pelosi’s office, Mnuchin also said the White House would propose a one-year debt ceiling increase should the impasse between the legislative and executive branches persist.

President Donald Trump signed an executive order on February 9, 2018, suspending the nation’s borrowing limit until March 1, 2019, when the national debt exceeded $22 trillion.

Meanwhile, Federal Reserve Chairman Jerome Powell also said he remains “concerned about the longer-term effects of high and rising federal debt” on the US economy.

He told lawmakers when testifying before the House Financial Services Committee on Wednesday that “it’s essential that Congress raise the debt ceiling in a timely way so that the US continues to pay its bills when and as due”.

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