Treasury Secretary Jacob J. Lew told Congress today he’s extending a measure that enables the U.S. to stay under the $16.7 trillion debt ceiling, as the Obama administration and Republican lawmakers remain in a stalemate on raising the limit.
Lew told congressional leaders in a letter that he is extending until Oct. 11 a “debt-issuance suspension period” that was to expire today under the statute governing the Civil Service Retirement and Disability Fund. The step, one of the so-called extraordinary measures the Treasury takes allowing it to maintain its borrowing ability, doesn’t necessarily mean the debt limit will be reached Oct. 11, the last day Congress is in session before a Columbus Day recess.
“I respectfully urge Congress to protect America’s good credit and avoid the potentially catastrophic consequences of failing to act by increasing the debt limit in a timely fashion,” Lew said in the letter, which was released by the Treasury Department.
The Treasury has said it probably will be able to finance government operations until after Labor Day on Sept. 2, while the Bipartisan Policy Center in Washington said in July the limit will be reached between mid-October and mid-November unless Congress raises it before then.
Lew told NBC’s “Meet the Press” on July 28 that “Congress needs to do its job” and raise the limit “in a way that doesn’t create a crisis.” House Speaker John Boehner, an Ohio Republican, said July 23 that Republicans won’t agree to raise the ceiling without spending cuts, threatening a showdown with President Barack Obama.
Two years ago, Republican lawmakers and the White House battled for months before Obama signed an increase into law on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire.
Standard & Poor’s, which days later downgraded the U.S. one step to AA+, changed its outlook in June of this year to “stable” from “negative.”
The downgrade by S&P, the world’s largest credit rater, contributed to a global stock-market rout. U.S. government debt lost none of its attraction for investors, though. Yields on Treasury securities dropped to record lows rather than going higher after the downgrade. Yields on 10-year Treasuries dropped 0.74 percentage point in the seven weeks following the downgrade to a then-record 1.67 percent.