Treasury Chief Warns of Severe Debt-Limit Fallout

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http://www.nytimes.com/2013/10/11/business/economy/treasury-secretary-warns-of-severe-debt-limit-fallout.html?google_editors_picks=true



WASHINGTON — Treasury Secretary Jacob J. Lew implored Congress on Thursday to raise the debt ceiling, warning of potentially severe market and economic repercussions if it did not.

But stock markets jumped on reports that Republicans might agree to a six-week extension of the debt limit to give legislators more time for broader budget negotiations. The deal would probably not finance any additional government spending, leaving much of the federal government closed.

In testimony before the committee, Mr. Lew stressed that the Treasury Department would run out of “extraordinary measures” to free up cash in a matter of days. At that point, the country’s bills might overwhelm its cash on hand plus any receipts from taxes or other sources, leading to an unprecedented default.

Mr. Lew said that Treasury had no workarounds to avoid breaching the debt ceiling. “There is no plan other than raising the debt limit,” he said. “The legal issues, even regarding interest and principal on the debt, are complicated.”