U.S. Treasury Secretary Timothy Geithner is warning that Washington could fail to cover its debts after Aug. 2 if Congress does not raise the legal limit on government borrowing. Geithner said Monday that the deadline is three weeks longer than previously thought.
In a letter to Senate Majority Leader Harry Reid, Geithner said the deadline was extended from early July because federal tax revenues were higher than expected. The reprieve is timely because Republican and Democrat legislators have serious reservations about hiking the $14.3-trillion U.S. debt limit without concrete steps to reduce the U.S. yearly deficit.
The Obama administration favors reducing spending and hiking taxes to slow the growth of debt. However the issue of raising the debt limit is independent of negotiations over Washington’s long-term fiscal policy.
To avoid a possible default on federal debt, Geithner said last week that he would start to put in place emergency measures, which includes helping state and local governments manage their debt and limit investments in government pension programs.
House Republican leaders scheduled a series of listening sessions for rank-and-file GOP members upon resumption of Congress. The sessions aim to generate feedback on how to frame the vote on proposals to raise the national debt limit.
Aside from laying out the issue on debt ceiling, the meetings will try to get consensus from Republican legislators on the conditions they want to place on any vote to raise the borrowing limit.
Speaker John Boehner has stressed that there would be no vote to authorize additional borrowing authority for the Treasury Department unless there are conditions attached.
