Former US Treasury officals urge Senate to solve debt limit

·2-min read

Former US Treasury secretaries on Wednesday urged the Senate to overcome the impasse on the government borrowing limit "without delay" to avoid the harmful fallout should Washington default on its debt.

However, the plea from the six former officials, including one Republican, may be falling on deaf ears as the opposition leader in the Senate has steadfastly refused to cooperate with the ruling Democrats to increase the debt ceiling and fund the government temporarily.

That could lead to a government shutdown as well as chaos in financial markets, officials have warned.

The Democratic-controlled House of Representatives passed a measure that would suspend the debt limit for two years and fund government operations through the end of the year.

But it is now stuck in the Senate, which has until September 30 to take action to avoid a shutdown.

"Even a short-lived default could threaten economic growth. It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services," the former finance ministers said in a letter to congressional leaders of both parties.

"It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair," according to the officials, who served under presidents Jimmy Carter, George W. Bush, Bill Clinton and Barack Obama.

They said protecting the "unshakeable creditworthiness" of the United States "is a sacrosanct responsibility."

But Republican Senate leader Mitch McConnell continues to use the debt limit and government shutdown as a political bludgeon to protest President Joe Biden's spending plans -- although he argued in favor of increasing the cap under former president Donald Trump.

McConnell said Democrats must go it alone.

"If Washington Democrats want to jam through trillions of dollars and reckless spending all by themselves, they can raise the debt limit, all by themselves," he said.

Under Trump the ceiling was suspended for two years, but was reinstated on August 1 with debt at $28.4 trillion.

The Treasury is already shuffling government funds around to continuing paying the bills, but warns it will run out of options in October.

Henry J Paulson was the lone Republican signatory of the letter, but according to a report by The Washington Post he had made an effort with Steven Mnuchin, Trump's Treasury secretary, to convince McConnell to approve a debt limit increase.

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