Treasury Secretary Timothy Geithner warned Congress on Monday that the U.S. could default on its payment obligations as early as mid-February.
Geithner, who has been employing “extraordinary measures” since the debt ceiling was reached on Dec. 31, said he was running out of maneuvers to delay a default. He urged lawmakers to raise the $16.4 trillion borrowing limit quickly.
The date range matches an informal estimate made by the Bipartisan Policy Center last week.
"Any estimate, however, will be subject to a significant amount of uncertainty because we are entering the tax filing season, when the amounts and timing of tax payments and refunds are unpredictable. For this reason, Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments,” Geithner said.
Earlier Monday, President Obama held a press conference to urge Congress to pass a debt-ceiling increase and said he would not allow Republicans to block an increase in exchange for more spending cuts.
Many Republicans see the debt ceiling as an opportunity to force Democrats to make deeper cuts or reform entitlement programs.
Geithner warned congressional leaders that default on any payments would be economically damaging, and said that it would ultimately add to the budget deficit.
He said Treasury makes 80 million separate payments a month, including benefit payments to seniors and veterans.
“If Congress does not act to extend borrowing authority, all of these payments would be at risk. This would impose severe economic hardship on millions of individuals and businesses across the country,” he said.
“It should also be noted that default would increase our borrowing costs and damage economic growth and therefore add to future budget deficits, not decrease them. This is why no President or Secretary of the Treasury of either party has ever countenanced even the suggestion of default on any legal obligation of the United States,” he added.
Geithner quoted former President Reagan in the letter warning against default.
“This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket. Instability would occur in financial markets and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations,” he quotes Reagan as saying in 1987.