The government reached its $16.7 trillion debt limit in May. Since then, it has been using “extraordinary measures” such as suspending U.S. investments in federal employee trust funds to create about $300 billion in additional borrowing room. But on the 17th the government will be left with only its cash cushion and daily receipts to pay its bills. Lew warned that before long it would not be able to meet all of its obligations. Economists and financial market experts warn that the stock market could plummet and that investors would demand higher returns on Treasury notes, which could raise interest rates and harm the economy. A House-passed stopgap spending measure pending before the Senate contains a GOP-backed provision that would give Social Security recipients and bondholders priority in receiving payments from the government. Lew again rejected the idea. “The United States should never have to choose, for example, whether to pay Social Security to seniors, pay benefits to our veterans, or make payments to state and local jurisdictions and health care providers under Medicare and Medicaid,” Mr. Lew said. “There is no way of knowing the damage any prioritization plan would have on our economy and financial markets. It would represent an irresponsible retreat from a core American value: We are a nation that honors all of its commitments.”
Posted on: Thu, 26 Sep 2013 03:09:00 +0000
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