Treasury Appeals to Congress to Fix Debt Default

U.S. treasury department

The Treasury Department will have to deal with severe consequences if the Congress doesn’t tackle the debt default.

Steven Mnuchin, the Treasury Secretary of the United States, started an initiative to address the debt default of the U.S. government. He wants the government to postpone the scheduled payments for its bonds. As a consequence, Steven Mnuchin asked the House Speaker Paul D. Ryan to increase debt limit at the first occasion.

On Thursday, Steven Mnuchin sent a letter to Paul D. Ryan in which he stated that the federal government is in full work on its tax policies. As a consequence, at this moment the government is usually adjourning the sale of certain local and state securities. Other strategies employed are going to regard the payment delay to several pension funds in an effort to not fall behind on other more important payments. However, these delays will eventually catch up with the government. At that point, there will be no other temporary solution left than to admit the fact that they don’t have money anymore to pay off the bills.

Thus, in his letter to Paul D. Ryan, Mnuchin declared that paying the outstanding debt represents a priority for the Treasury that would not be taken lightly. This is why Mnuchin urges Congress to tackle the debt default with the first rising opportunity and change the deadline. Only then will the Treasury be able to continue its common priorities.

The Treasury Department is entitled to perform payments each year that are usually known as Social Security checks. This way, the institution can cover Medicare bills, research, care for veterans, funds for the military, and other projects as well. By the end of the year, the Treasury ends up dealing with trillions of dollars in a complicated system.

However, this year, budget experts signaled a sensitive situation. If the Treasury Secretary fails to convince Congress to raise the debt limit by August, there will be some troublesome consequences. One of them could be that the government will have no other options to fix the debt default and it will have to admit that it failed to respect its obligations.

By the end of the fiscal year which is on September 30th, the Congressional Budget Office expects the government to spend $3.963 trillion. On the other hand, the national revenue will amount to $3.404 trillion. Thus, the deficit will be around $559 billion. CBO predicted that the publicly held debt would round up to $14.8 trillion.

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About Denise Ehrlich

Denise would describe herself as one more of an experience witness than a journalist. Soon after graduating, Denise worked as a journalist during the presidential campaign of Senior US Senator John McCain. Since then, much has changed, and Denise found herself gravitating towards world news.