White House presses lawmakers to raise debt limit

WASHINGTON: The White House urged lawmakers on Monday to vote to lift a cap on the cash-strapped US government's ability to borrow, a pivotal battle in an all-out political war over Washington's finances.

"We need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious indeed, and those who suggest otherwise are whistling past the graveyard," said spokesman Jay Carney.

"It's a foolish thing to suggest that we can somehow, as the United States of America, default on our obligations and that it would not have seriously negative consequences if we suddenly stopped paying our bills," he added.

US President Barack Obama's Republican foes have warned they will thwart any attempt to lift the debt ceiling unless his Democratic allies agree to massive long-term spending cuts, chiefly to beloved social programs.

Democrats say they know Washington must tighten its belt but have blasted Republicans for flatly refusing to so much as discuss raising taxes and bloodied them for calling for cuts to the Medicare health care program for the elderly and disabled.

While lawmakers were expected to vote on raising the debt ceiling before a critical August deadline, the overall war over spending and taxes was expected to drag out through Obama's 2012 reelection bid.

Carney's comments came as the US Treasury warned of economic catastrophe Monday as it ran into its $14.29 trillion ceiling on borrowings and began short-term measures to delay breaching the limit.

In a letter to US Senate leader Harry Reid, Treasury Secretary Timothy Geithner said the country had reached the statutory debt limit as of Monday and was initiating a "debt issuance suspension period" to keep from going over it.

Geithner urged Congress to raise the ceiling "in order to protect the full faith and credit of the United States and avoid catastrophic consequences for citizens."

To avoid topping the ceiling, the government would halt the automatic cycling of civil service pension funds into US Treasury debt, the way they are traditionally stored, he said.

The move will give the Treasury about $224 billion of headroom as it meets an estimated $120 billion a month in net new borrowing needs to cover the government's mounting budget deficit.

But by August 2, according to Treasury projections, spending requirements will exhaust the temporary measures and the government will have to either slash spending on existing obligations or possibly default on its debts.

In a letter to another senator on Friday, Geithner warned that failure to increase the debt limit "would force the United States to default on the obligations, such as payments to our service members, citizens, investors, and businesses."

"Default would not only increase borrowing costs for the federal government, but also for families, businesses, and local governments -- reducing investment and job creation throughout the economy," he told Senator Michael Bennet.