Treasury Secretary Timothy Geithner Monday urged Congressional leaders to move swiftly to extend the nation's borrowing authority.
In a letter to House Speaker John Boehner, R-Ohio, and other key leaders in the House and Senate, Geithner said that the Treasury Department is already taking "extraordinary measures" to fulfill the nation's financial obligations.
However, Geithner warned those steps would run out sometime between mid-February and early March, with a more precise estimate to be issued later.
"Any estimate, however, will be subject to a significant amount of uncertainty because we are entering the tax filing season, when the amounts and timing of tax payments and refunds are unpredictable," Geithner said.
He added, "For this reason, Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments."
If the debt ceiling is not increased, Geithner said that the country would be forced to try to pay its bills only with the cash it has on hand on any given day, warning of dire consequences if the government is forced to go that route.
"The U.S. government makes approximately 80 million separate payments per month," Geithner said. "These include payments for Social Security; Supplemental Security Income; Medicare; Medicaid; national security needs, including military salaries, military retirement, veterans' benefits, and defense contractors; income tax refunds; federal employee salaries and retirement; law enforcement and operation of the justice system; unemployment insurance; disaster relief; goods and services sold to the government under contracts with small and large businesses; and many others."
He added, "If Congress does not act to extend borrowing authority, all of these payments would be at risk. This would impose severe economic hardship on millions of individuals and businesses across the country."
Geithner warned that even a temporary disruption in the nation's ability to pay the bills Congress has already approved could be very harmful.
"Even a temporary default with a brief interruption in payments that Congress subsequently restores would be terribly damaging, calling into question the willingness of Congress to uphold America's longstanding commitment to meet the obligations of the nation in full and on time," Geithner said.
He added, "It should also be noted that default would increase our borrowing costs and damage economic growth and therefore add to future budget deficits, not decrease them."
No prior President, Treasury Secretary or Congress has ever allowed the "full faith and credit" of the United States to come into question, Geithner said, noting that only Congress has the authority to extend the debt ceiling.
"It must be understood that the nation's creditworthiness is not a bargaining chip or a hostage that can be taken to advance any political agenda; it is an essential underpinning of our strength as a nation," Geithner said. "Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom."
He added, "I respectfully urge Congress to meet its responsibility to the country by extending normal borrowing authority well before the risk of default becomes imminent."
by RTT Staff Writer
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