The US Treasury hit its US$14.29 trillion legal limit on borrowing on Monday as the White House sternly warned lawmakers they must approve an increase or risk a catastrophic default on debt payments.
With Washington in the grips of an all-out political war over government finances, US Secretary of the Treasury Timothy Geithner formally notified US Congress that the government had slammed into its debt ceiling and urged an increase.
The secretary warned US Senate Majority Leader Harry Reid in a letter that the US would exhaust temporary remedies come Aug. 2 and will face a choice between draconian spending cuts or a possible default.
Geithner urged lawmakers to approve a debt ceiling increase “as soon as possible,” saying action was needed “to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens.”
US House Speaker John Boehner, who has led the opposition resistance to raising the cap, responded by reiterating the Republican line on the need to reduce spending.
“As I have said numerous times, there will be no debt limit increase without serious budget reforms and significant spending cuts — cuts that are greater than any increase in the debt limit,” he said in a statement.
Meanwhile, bond markets took a lackadaisical view of the controversy. The yield on US bonds, which indicates investors’ view of the creditworthiness of a borrower, dropped to near their lowest levels so far this year, a sign of confidence in the government.
The 10-year Treasury yielded 3.1490 percent at the close of trade.
Behind the rhetoric, US Vice President Joe Biden has been hosting talks with top Republicans in a bid to agree on what long-term spending cuts should be tied to a debt ceiling increase that lawmakers are ultimately all-but-certain to approve.
To avoid topping the ceiling, Geithner said the government would halt the automatic cycling of civil service pension funds into US Treasury debt, the way they are traditionally stored.
The move will give the Treasury about US$224 billion of headroom as it meets new borrowing needs to cover the government’s mounting budget deficit, which has risen an average of US$124 billion a month since October.
White House spokesman Jay Carney said Geithner had taken “extraordinary measures” to provide “some cushion” to the government through Aug. 2, but pressed lawmakers not to delay action to raise the ceiling.
“We need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious indeed and those who suggest otherwise are whistling past the graveyard,” Carney said. “It’s a foolish thing to suggest that we can somehow, as the United States of America, default on our obligations and that it would not have seriously negative consequences if we suddenly stopped paying our bills.”
US President Barack Obama’s Republican foes have warned they will thwart any attempt to lift the debt ceiling unless his Democratic allies agree to massive long-term spending cuts, chiefly to beloved social programs.
Democrats say they know Washington must tighten its belt, but have blasted Republicans for flatly ruling out raising taxes and bloodied them for calling for cuts to the Medicare healthcare program for the elderly and disabled.
Some Democrats on the party’s left wing also complain that spending cuts will stall the economic recovery and risk leaving in the lurch millions of Americans hunting for jobs.
While lawmakers are expected to vote on raising the debt ceiling before the critical August deadline, the overall war over spending and taxes is expected to drag out through Obama’s re-election bid next year.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique