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Treasury planning emergency measures to meet debt

Already at the statutory federal debt limit, the Treasury is asking Congress to raise the ceiling as soon as possible.
By Doug G. Ware   |   March 14, 2015 at 1:45 AM
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WASHINGTON, March 14 (UPI) -- The U.S. Treasury is getting ready to once again start maneuvering to keep the federal government from defaulting on its debt, and possibly setting off undesirable financial consequences, the agency said Friday.

The United States is currently at the federal debt limit, but for the last 12 months hasn't had to suffer the consequences of it -- thanks to a congressional-imposed suspension, which expires Sunday. That means, Treasury officials say, they will have to take "extraordinary measures" beginning Monday to keep the federal government's head above fiscal water.

Unless Congress acts quickly to raise the limit, those measures will include putting a stop to a planned $46 billion investment in the federal employee pension fund, which is scheduled for June. By halting the reinvestments, the government effectively borrows that money to help stay under the debt. However, by law, that money must be repaid before the debt limit can be increased again.

Other measures the Treasury will likely take are drawing down a currency stabilization fund and imposing moratoriums on state and local government deposits, USA Today reported.

The federal government began imposing limits on the amount the Treasury can borrow nearly a century ago, but because of multiple recent struggles to stay beneath it Congress simply suspended the law. The suspension, granted in February 2014, expires Sunday.

"Beginning on Monday, the outstanding debt of the United States will be at the statutory limit," Treasury Secretary Jacob Lew wrote in a letter to House Speaker John Boehner Friday. "Because Congress has not yet acted to raise the debt limit, the Treasury Department will have to employ further extraordinary measures to continue to finance the government on a temporary basis."

Lew informed Boehner the Treasury is planning to declare a "debt issuance suspension period" on reinvestments into several funds.

"These actions have been employed during previous debt limit impasses," Lew said.

Lew urged Rep. Boehner to raise the federal debt ceiling as soon as possible, but did not offer any indication how long the Treasury's planned measures will last. The Bipartisan Policy Center, which monitors finances influencing the national debt, estimates that the U.S. government will lose its ability to borrow money between October and January.

"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 said. "No Congress in our history has failed to meet that responsibility."

The Treasury chief concluded the letter by asking Congress to refrain from making a political issue out of the government's pending financial predicament. In addition to Boehner, the letter was also addressed to several other congressional members who wield power to increase the debt.

"The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship."

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