By Brai Odion-Esene

WASHINGTON (MNI) – Senior Obama administration officials Wednesday
ramped up on the pressure on Congress to raise the debt ceiling, warning
that there is no alternative and the stakes are higher compared to past
stand-offs over debt.

“There is no way around it,” one senior official said about
raising the limit, there is no other plan that can preserve the
creditworthiness of the United States.

In a briefing with reporters, the official said while
stronger-than-expected tax receipts as of April 15 allowed the U.S.
Treasury to push back its projection of when the debt limit will be
breached — to August 2 from July 8 — “at this point, we think it’s
unlikely that the August 2nd date … will change.”

Asked if the administration has a backup plan in case the current
impasse continues and the limit is not raised, the official made it
clear there is no alternative, and no “secret plan” in the works that
would prevent the federal government from defaulting on its obligations.

Another senior administration official warned, “The stakes are
higher now” compared to previous impasses with Congress. “The amount of
debt outstanding is much higher, the extraordinary measures don’t go as
far.”

This underlines the “critical” nature of raising the debt limit now
and raising it early, the official said.

Some lawmakers have suggested the U.S. simply pay the interest on
its debt, and rollover the outstanding debt that is underneath the debt
ceiling. However, the second official disputed that proposal, saying the
market would be unlikely to buy U.S. government debt in the future if
the country where to default.

Asked by Market News International if there was growing concern
that Congress might not raise the debt limit in time, the administration
officials were bullish, noting that while some “drama” always precedes
hiking the debt limit, it has always been done.

“There is a strong sense that they (Congress) appreciate the
gravity of the situation,” the official said, and the administration
remains confident that the limit will be raised.

Some lawmakers have argued that sales of the federal government’s
assets might help create additional headroom under the debt ceiling, but
the second official made it clear in no uncertain terms that will not be
an option.

“We are not interested in fire sales where we would be dumping
assets in the market, getting a depressed price, and not recognizing a
good return for the taxpayers,” the official said. “We’ve been very
clear that we don’t think any fire sales are a good idea from an asset
management standpoint,” official said, adding

In any case, such sales would not remove the need to raise the debt
limit, the official said.

Likewise, extending the “debt issuance suspension period” announced
by U.S. Treasury Secretary Timothy Geithner Monday, which lasts for two
months, would not buy more time, the official said.

So far there are no signs of anxiety or concern in the financial
markets over the delay in raising the limit. Market participants have
seen such stand-offs before, the official said, and remain confident
Congress will act.

Still, there is “a very high level confidence in the United States
government debt … this is not something that you want to jeopardize,”
the official warned.

** Market News International Washington Bureau: 202-371-2121 **

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