Jack Lew

U.S. Treasury Secretary Jack Lew Sends Love Letter To Congress Over Debt Ceiling

Looking at Greece it is easy for those in the most prosperous nations in the world to assume such misadventures in government debt could never traverse to domestic shores. But perhaps an alien visiting the planet and just looking at a recent government letter and the history of U.S. discourse over government debt might disagree.

U.S. Treasury Secretary Jack Lew Sends Love Letter To Congress Over Debt Ceiling

Jack Lew says this fall Congress must act on debt

With a dispassionate, mathematical logic, the alien might consider U.S. Treasury Secretary Jack Lew’s July 29 letter noting that the government has taken “extraordinary measures… to avoid default.”

Those “extraordinary measures” keeping the government afloat might be considered equal to finding coins in the couch. As he outlined in the letter, measures include a the suspension of debt to pay the Civil Service Retirement and Disability Fund as well as suspension of the daily reinvestment of Treasury securities held by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan.

To an alien, this might seem odd. “How is it that a government can authorize spending but not authorize payments,” the alien might say, echoing the words of Lew as he spoke on a CNNMoney interview.

Jack Lew: The U.S. stands alone in not paying its bills through consistent debt ceiling reauthorization fights

“The U.S. has to be a leader in the world,” Lew said. “We can’t create a sense of anxiety that we won’t pay our bills.” Lew notes the concept of a debt ceiling is not common around the world, as most governments authorize government spending to coincide with payment of those obligations.

“We believe that the measures will not be exhausted before late October, and it is likely that they will last for at least a brief additional period of time,” Lew wrote in the letter.

The debt ceiling limit has typically touched on a third rail topic of spiraling U.S. government debt and unfunded liabilities for retiring seniors. There is a specific demographic bubble being created by the “baby boomer” generation that is of concern. Currently the U.S. government spends $2.40 for every senior over 65 years old but just $1 for every child.

Some have viewed the debt ceiling as a method of keeping a lid on spending, an unpopular measure that weak-kneed politicians on both sides of the political spectrum have refused to address. In both his letter and subsequent interview, Lew outlined how the U.S. Treasury has engaged in “extraordinary measures to continue to finance the government on a temporary basis” while holding off the debt collector until the Fall, when he says Congress must act to authorize payments. The exact point when Congress will be required to act is unknown due to unpredictable revenue flows, but when that point comes Congress should dispense with the brinkmanship and keep the government afloat, Lew said.

Read the full letter here.

Comment (1)

  • TutoringServicesNi

    I agree with today’s Seeking Alpha article on near-term prospects for HL : HL is an excellent buy at this time, as are some of the other Gold and Silver Mining Stock Equities in the XAU and HUI Indexes, all three of which gained today ! Below is a summary of recent news in this connection :

    Greg Robb on marketwatch.com is right for once : “Sharp Deceleration in Employment Costs Gives FRB A Reason to Delay Rate Hike” !

    Langlois on marketwatch.com is right for once, now is the time to get in bed with Gold, since the FRB is impotent ! The FRB has been reduced to Texas Bluffing Jawboning the U.S. Dollar higher and Gold lower, because the tepid U.S. Economy cannot tolerate any increase in the Fed Funds Rate. The tepid U.S. GDP Growth rate for the first six months of only 1.45% per year, along with the low PCE Core Annual Inflation Rate of a mere 1.2%, which is down from 1.3% of the previous month, does confirm the veracity of Larry Summer’s March 2015 warning to the FRB that the U.S. Economy is trapped in “Secular Stagnation”, a 1930 Theory which explains the Great Depression; Larry Summers warned the FRB to not do a “preemptive attack on Inflation” because the risks of a downturn far outweigh the risks of overheating, lest the 2015 FRB repeats the mistake of the 1937 FRB when premature tightening turned back the tepid recovery and thereby prolonged the Great Depression to December 7, 1941, the “date that will live in infamy” !

    FRB Member Charles Evans (Pres of the FR Bank of Chicago) is in essential agreement with Larry Summers, saying in March 2015 that the earliest rise in fed Funds Rate shouldn’t occur until mid-2016 . FRB Member Williams totally disagrees with FRB Mester’s notion that increasing the Fed Funds Rate is a good method of promoting “financial stability”.

    In conclusion, the FRB is in complete disarray, as its own study predicts that the PCE Annual Core Inflation Rate won’t reach its Mandate of 2% until 2020, thus rendering the FRB IMPOTENT. Therefore, as indicated by the photograph at the top of the Langlois article, NOW IS THE TIME TO GET IN BED WITH GOLD ! STRIKE WHILE THE IRON IS HOT !

    When will some large Banks be found guilty in the 4 month old Investigation by Authorities into Manipulating the Gold price lower through the use of “Naked Gold Shorts and OTC Derivatives”, as reported today in a Internet article sponsored by Dr. Paul Craig Roberts ? July 31, 2015 at 1:18 pm PDT

    July 31, 2015 at 4:32 pm

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