WHITE HOUSE OPENLY THREATENS U. S. DEFAULT AS DEBT FIGHT ESCALATES

White House openly threatens US default as debt fight escalates

US Treasury Secretary Jacob Lew has issued a categorical warning that the United States will default on its $16.7 trillion debt and throw the world into turmoil unless Congress agrees to raise the legal debt ceiling by October 17.

The US Treasury warned last week that the dispute could lead to a “catastrophic” collapse.

By Ambrose Evans-Pritchard

8:32PM BST 06 Oct 2013


“Congress is playing with fire. If the US government, for the first time in its history, chooses not to pay its bills on time, we will be in default,” said Mr Lew.

“Anyone who thinks that the United States government not paying its bills is anything less than default hasn’t thought about it very clearly,” he told NBC’s Meet the Press.

Mr Lew said the treasury had already exhausted its normal funds in May and has been “creating room” by resorting to one-off tricks, but these, too, have run dry. The government will have just $30bn by October 17, half what is needed to cover immediate needs over subsequent days.

“That is a dangerously low level of cash, and we’re on the verge of going into a place we’ve never been. Even getting close to the line is dangerous,” he said.

Mr Lew’s dramatic comments mark a further escalation in the game of chicken on Capitol Hill. They suggest that the White House has for now ruled out a drastic fiscal squeeze to balance the books if there is no deal, and is unwilling to contemplate exotic loopholes – such as a $2 trillion platinum coin – to circumvent the will of Congress.