Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Six ex-U.S.Treasury chiefs urge debt limit hike

Published 09/22/2021, 12:46 PM
Updated 09/22/2021, 04:11 PM
© Reuters. FILE PHOTO: United States one dollar bills are curled and inspected during production at the Bureau of Engraving and Printing in Washington November 14, 2014.   REUTERS/Gary Cameron/File Photo

By David Lawder

WASHINGTON (Reuters) -Six former U.S. Treasury secretaries urged congressional leaders to raise the federal debt limit without delay, saying that a default would cause "serious economic and national security harm" and that delay would also be detrimental.

"Even a short-lived default could threaten economic growth. It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services," the six former secretaries said in the letter https://home.treasury.gov/system/files/136/Former-Treasury-Secretaries-Letter-to-Congressional-Leadership-on-the-Debt-Limit-9-22-21.pdf, released by Treasury. "It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair."

The letter was not signed by former Republican Treasury secretaries Steven Mnuchin, John Snow, Nicholas Brady or James Baker. Those signing were Democrats Jacob Lew, Timothy Geithner, Lawrence Summers, Robert Rubin and Michael Blumenthal. Republican former secretary Henry Paulson also signed.

Mnuchin could not immediately be reached for comment. He presided over the last debt limit suspension, in August 2019, passed by both Democrats and Republicans.

U.S. Treasury Secretary Janet Yellen has warned that without a debt ceiling increase, the U.S. government will likely exhaust Treasury cash balances and extraordinary borrowing capacity under the $28.4 trillion debt limit in October, leaving the government at risk of default on Treasury debt and other obligations.

Republicans have refused to support a debt ceiling hike because of Democrats' plans to pass a massive social spending bill of up to $3.5 trillion without Republican support.

Senate Republicans are indicating they will sink a bill passed by House Democrats to suspend the debt ceiling and fund the government past the Sept. 30 fiscal year end, with a showdown vote likely next week.

The letter from the former Treasury secretaries left out references to Democrats' "reconciliation" spending bill, but acknowledges the contentious political divide in Washington and said the Biden administration had a role to play in lifting the debt limit.

"We recognize that in recent years, as our politics have become more polarized and divisive, addressing the debt limit has become more contentious and politically fraught," they wrote. "This makes it all the more important that Congress and the Administration begin the process to extend the nation’s borrowing authority without delay."

© Reuters. FILE PHOTO: United States one dollar bills are curled and inspected during production at the Bureau of Engraving and Printing in Washington November 14, 2014.   REUTERS/Gary Cameron/File Photo

The letter concentrated on economic consequences of failure to raise the debt limit and said the risk of an "accidental default" was heightened because pandemic rescue spending had made borrowing needs more uncertain.

"There is no viable way to manage payments across the federal government to prevent a default if there are insufficient resources available absent action on the debt limit," the former Treasury chiefs wrote, adding that postponing action until close to the default deadline "undermines confidence in our political system at home and abroad."

Latest comments

looking for lost gold 🪙
Government issues debt and the Federal Reserve, aka. government, buys the debt or makes sure the the big banks are funded enough to buy it anyway. It’s just theatre.
Funny Bloomberg TV omitted in their initial news release who the six were..follow the Democratic Party money trail…and consulting fees , speaking engagements etc. All i ask for is unfiltered news please…a pipe dream for sure!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.