WASHINGTON – Congress must act before the temporary suspension of the debt ceiling ends this week or the Obama administration will have to take “extraordinary measures” to avoid a default, Treasury Secretary Jacob Lew said Monday at the Bipartisan Policy Center.
Lew said Congress must quickly act on its responsibility to increase borrowing authority because the president can’t do so without a congressional sign-off.
In October, in order to end the government shutdown, Congress suspended the debt ceiling until Feb. 7 by passing the Continuing Appropriations Act of 2014. The act essentially handed over Congress’ authority to set the limit by giving it temporarily to President Barack Obama. The appropriations measure gave ultimate authority over spending to Obama until Friday because Congress could only stop him by passing a bill – a bill that Obama then could veto.
With the suspension ending Friday, Lew predicted U.S. funds will run out quickly if Congress fails to act. The ceiling now is $17.2 trillion.
“In the absence of congressional action, the Treasury will be forced to use extraordinary measures to continue to finance the government,” Lew said.
Extraordinary measures, such as deferring large trust fund investments, have been taken by the Treasury before, but are not sustainable. Lew said these measures “will give us only a brief span of time.”
“Presidents from both political parties have always stood firm on the importance of protecting the full faith and credit of the United States,” Lew said. “We should never put this precious asset in jeopardy.”
Rudolph Penner, former director of the Congressional Budget Office, said debt-ceiling debates historically have been more political show than substance because neither the president nor Congress has been willing to actually allow a default.
Raising the debt limit should not be seen as an increase in spending, he said, but as a necessary move to fulfill promises the United States has made both to other countries and to constituents, such as Social Security payments and military salaries.
Republicans generally oppose raising the debt ceiling, but they are expected to approve an increase because they’ve done so twice already during the Obama administration. Lew asked Congress to work quickly “without unnecessary delays or political posturing that could snowball into a manufactured crisis that the American people so clearly want us to avoid.”
While the United States can still borrow money through late February, Lew said the sooner Congress acts, the better.
“It would be a mistake to wait until the eleventh hour to get this done,” he said.