Statutory Debt Limit of United States

By Jiang Xufeng

The United States has reached the statutory debt limit Monday and the Obama administration pressed the Congress to lift the debt ceiling in a timely manner to ensure global confidence in the world’s largest economy.

The United States has hit the 14.29 trillion U.S. dollars legal ceiling on borrowings and was starting to take extraordinary measures to buy some time until August 2 for Democrats and Republicans to ink a deal to raise the debt ceiling and stave off a default on U.S. debt, according to a letter addressed to congressional leaders from Treasury Secretary Timothy Geithner.

“I have written to Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens,” Geithner said.

“I again urge Congress to act to increase the statutory debt limit as soon as possible,” noted the letter, a second similar one from Geithner within a short time span of two weeks.

White House spokesman Jay Carney commented Monday that the Treasury Department has taken some extraordinary measures that it is able to take in a bid to provide “some cushion,” as previous Treasury Secretaries have taken in a similar situation.

“But it is a reminder that we need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious, indeed,” Carney said abroad Air Force One.

Carney also cautioned that those who suggest otherwise are ” whistling past the graveyard”, adding that “it is a foolish thing to suggest that we could somehow as the United States of America default on our obligations”.

Analysts held that the mounting debt issue has become one of the major downside risks for the nascent U.S. economic recovery, as U.S. debt default risk might push up the lending cost in the nation, sap the badly-needed economic recovery momentum and increase the financial instability.

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