Leaders in both parties say they don’t want to see the United States default on any of its financial obligations, but they have made no apparent progress towards raising the federal debt limit to avoid such a debacle.
In a letter to congressional leaders Wednesday, Treasury Secretary Jack Lew urged lawmakers to raise the limit by Feb. 7, when its suspension is scheduled to expire. If Congress does not, Treasury will use so-called “extraordinary measures” to postpone a default.
Lew cautioned, however, that such measures would buy less time than in the past for two reasons:
• The government pays out a large amounts of money in tax refunds in February.
• The extraordinary measures available in coming weeks will provide less borrowing capacity than the measures that have been used at other times of the year.
Last month Lew estimated that these special measures would prevent default through late February or early March. But he now says the latest data indicate that late February is more likely.
It is clear that the debt limit must be raised. Refusing to pay for policies that have already been approved will not make those policies more “fiscally responsible.” Instead, forcing a default on any part of the government’s obligations would damage the creditworthiness of the United States and risk harming the global recovery.