U.S. Treasury Secretary Steven Mnuchin urged Congress on Wednesday to raise the federal debt limit before lawmakers start their August recess, to avoid higher interest costs to taxpayers and market uncertainty about a potential default.
However there was little sign Congress would heed Mnuchin's call, at least for the moment. The House of Representatives is due to start its recess on Friday with no hint of movement on the issue, while the Senate is consumed with trying to pass a healthcare overhaul bill.
That could leave the debt limit unaddressed until Congress returns on Sept. 5, perhaps one month before the Treasury runs a real risk of not being able to pay all of its obligations.
The last extension of the federal borrowing limit expired in March with total debt of around $20 trillion, but the Treasury has extended its ability to issue debt by employing extraordinary cash management measures, including deferring reinvestments in federal employee pension funds.
But short-term Treasury bill markets have grown nervous about the potential for the Treasury to exhaust its borrowing capacity by mid-October, sending yields higher and crushing demand for a recent 3-month bill auction.
The situation is costing taxpayers money and stoking market uncertainty, said Mnuchin, a former banker and Hollywood film financier.
Reference: The New York Times
Read More: https://www.nytimes.com/
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