Washington – Treasury Secretary, Scott Bessent, said on Congress leaders on Friday that the United States would likely lack the loan authority by August.
In a letter of May 9, he urged them to extend the debt ceiling by July, before the congress leaves for its annual recess in August, in order to avoid economic calamity.
Bessent said there was “significant uncertainty” on the exact date.
“However, after receiving receipts for the recent application season in April, there is a reasonable probability that the species and extraordinary measures of the federal government are exhausted in August while the Congress should be in recess,” said Bessent. “Consequently, I respectfully exhort the congress to increase or suspend the limit of debt by mid-July, before its planned break, to protect full faith and credit of the United States.”
The Republicans, who control the Chamber and the Senate, plan to increase the debt ceiling by 4 billions of dollars or 5 billions of dollars in their scanning bill to adopt the agenda of President Donald Trump. This is a major challenge, because the party has difficulty unifying on various components of this legislation with their narrow majorities. It is far from clear that they will have a bill before August.
If they fail in this calendar, they may have to face the question of the debt limit separately and rely on democratic support to solve it and avoid an economic crisis which would probably result from a defect on American debt.
“An inability to suspend or increase the limit of debt would wreak havoc on our financial system and reduce the position of security and world leadership in America,” said Bessent in the letter.
