Treasury Prepares to Take Measures to Avoid Default
The Obama administration notified Congress on Friday that it was taking steps to free up about $260 billion so that it can keep paying the nation's bills when a temporary suspension in the debt ceiling lapses this weekend.
To preserve its borrowing capacity, the Treasury Department said it will use the same measures it has used previously when Congress had failed to raise the limit. The Treasury took the first step this week, suspending sales of special securities that state and local governments use to temporarily invest proceeds from sales of municipal bonds.
The department said that measure and three others it outlined Friday would prevent the federal government from defaulting on any of its obligations until after the Labor Day holiday on Sept. 2.
(Read More: Lawmakers Accuse IRS Officials of Lying in Scandal)
The Obama administration called on Congress to raise the debt ceiling and avoid a political battle that could roil financial markets and harm the economy.
"In order to avoid a repeat of the damaging brinkmanship that occurred in 2011, Congress should remove the threat of default by taking this action as soon as possible," Treasury Secretary Jack Lew told congressional leaders in a letter.
Republicans want to use the need to raise the borrowing cap as leverage to seek fresh budget cuts and change the tax code.But Obama has said any deal to cut the budget deficit must include more revenues, an idea that is anathema to conservatives.