A top US politician has warned that America could again face defaulting on its debts if Congress fails to raise the country’s borrowing limit.
Treasury Secretary Jack Lew’s concerns come after the debt limit was suspended by Congress in October. The suspension, put in place to end a crippling government shutdown, is set to run out later this week but Mr Lew has said the reinstatement will see the treasury struggle to make ends meet in the long term. One specific concern which is fast approaching is income tax refunds; with many Americans set to claim money back, Mr Lew has raised concerns that the demand will be too much for the treasury to take.
Speaking at the Bipartisan Policy Center in Washington, Mr 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.”
The comments will no doubt reignite the argument between the Republican and Democrat parties, which first led to the suspension of the debt ceiling. In 2011, the Republicans agreed to a rise in the debt limit in return for limitations in government spending, but in 2013, they blocked any further increases in objection to the President’s so-called ‘Obama-care.’ A landmark social reform which would see free health care made available to the poorest Americans, the Republicans have never supported the bill, which they feel would plunge the country into unmanageable debt.
However, Mr Lew did play down the immediate need for cutbacks speaking positively about progress made since the two parties reached a temporary truce in October. He said: “I’m not sure this is the year for the long-term fiscal challenge to be dealt with. I actually believe that we’ve made so much progress in the short and medium term.”