US Treasurer Warns Debt Ceiling Will Be Hit Very Soon

The Obama administration warned on Monday it could start defaulting on the government’s obligations “very soon” after hitting a limit on the national debt later this month.

Treasury Secretary Jack Lew said the federal government should hit the ceiling by the end of February unless Washington raises the nation’s limit on public borrowing.

The federal government would then burn through its remaining cash more quickly that it would at other times of the year because the Treasury will be issuing tax refund checks, Lew said.

“Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government,” Lew said in prepared remarks at a Bipartisan Policy Center event.

Washington will start scraping up against the debt ceiling by Friday, the day a suspension on the borrowing limit is scheduled to lift. The Treasury will then use accounting measures that will allow the government to keep adding to the debt, but Lew said this strategy would only get the administration to the end of the month.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza