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Thursday
May192011

White House to Congress: 'No Way Around' Increasing the Debt Limit

Jupiterimages/Thinkstock(WASHINGTON) -- Two days after the federal government reached its $14.29 trillion limit, The White House Wednesday ratcheted up pressure on Congress to increase the debt ceiling by Aug. 2.  

“There really is no alternative to raising the debt limit,” an administration official said, “there is no way around it.”

Officials said there is no Plan B, no emergency plan if the debt limit is not raised.

Administration officials used past as precedent,  providing letters from administrations past requesting the debt limit to be raised, warning against the same economic impacts should it not be raised, including letters sent by President Ronald Reagan in 1983 to then Senate Majority Leader Howard Baker and from 1987 from Secretary Baker to Speaker James Wright describing the “unprecedented and catastrophic would ensure,” if the debt ceiling was not raised then.

“You can see that the administration in both parties, Secretaries of Treasury in both parties have spoken about the debt limit and made the same conclusions about the effects of a failure to increase the debt limit over decades.”

As ABC News reported on Monday, the government has created some wiggle room postponing any default on payments until Aug. 2 by measures which include borrowing billions from special government funds that are used to provide benefits to retired and disabled Federal employees, stabilize the dollar or foreign currencies or fund local and state securities.

Wednesday administration officials said they have also told Congress that there’s one other step they could deploy between now and Aug. 2 -- unwinding the dollar denominated portion of the exchange stabilization fund, a fund maintained to intervene in currency markets. But, that would only be an addition of $23 billion, not large in the grand scheme of things.

Copyright 2011 ABC News Radio







ABC News Radio