U.S. Treasury warns of harm from debt default

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Posted: Thursday, October 3, 2013 12:00 am

WASHINGTON (AP) — The U.S. Treasury Department is warning that the economy could plunge into a downturn worse than the Great Recession if Congress fails to raise the federal borrowing limit and the country defaults on its debt obligations.

A Treasury report says a default could cause the nation's credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket.

Treasury officials hope that by laying potential consequences they will be able to bring pressure on Congress to act. Treasury Secretary Jacob Lew has said he will have used up the extraordinary measures to avoid breaching the debt ceiling by Oct. 17. After that, the government will have around $30 billion of cash on hand.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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