Treasury Secretary Timothy F. Geithner said that even if he uses “extraordinary measures” to prevent the United States from defaulting on its obligations, lawmakers will need to raise the legal limit on government borrowing by July 8.
Current projections show the United States will reach its $14.3 trillion cap on borrowing “no later than May 16,” Geithner wrote in a letter Monday to leaders on Capitol Hill. He said that he would “use all measures available to me” to delay additional borrowing above that cap.
But with the national debt rising on average by $125 billion a month, those financial maneuvers would buy less than eight weeks for Congress to act.
“Default by the United States is unthinkable,” Geithner wrote. “This is not a new or partisan judgment; it is a conclusion that has been shared by every Secretary of the Treasury, regardless of political party, in the modern era.”
He said failure to raise the debt limit would result in higher interest rates and borrowing costs, falling home values and shrinking retirement savings for many Americans. He warned that default “would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.”