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| US said to be working on debt Plan B |
| 2011-07-07 |
| The US government is said to be working on a plan to avoid a historic default should Congress fail to lift the country's legal borrowing limit by the start of next month. Senior officials at the US Treasury are reported to be examining a range of options that will allow the government to continue to make interest payments on its borrowings if an agreement is not struck by August 2, the date the Treasury has said the $14.3 trillion (£9 trillion) borrowing limit will be reached. Timothy Geithner, the US Treasury Secretary, has repeatedly said there is no contingency plan for fear of undermining the sense of urgency needed for Republicans and Democrats in Congress to agree. A Treasury spokesman said yesterday there was no alternative. Both parties, as well as White House representatives, have been in tense negotiations in recent weeks over the limit but remain divided. The Republicans are seeking cuts to spending as part of the plan, while Democrats are focused on repealing tax breaks for the wealthy. Analysts say a plan to avoid default even without agreement being reached may involve delaying payments to the recipients of Social Security. The Treasury is likely to have a gap of about $134bn between its receipts and the revenue it takes in next month, according to the BiPartisan Policy Center. |
| Posted by:tipper |