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US debt limit crisis threatens chemicals, other manufacturing

July 26/2011

(ICIS) -- The US debt limit crisis could have serious consequences for domestic chemicals producers and other manufacturers if not quickly resolved, a top industry official said on Monday, and ultimately it could trigger a new recession.

Larry Sloan, president of the Society of Chemical Manufacturers and Affiliates (SOCMA), said that as long as the political logjam over raising the US governments borrowing authority persists, the greater the threat to the nations credit rating and the overall economy.

Republicans and Democrats in Congress along with President Barack Obama have been struggling for weeks to come up with a mutually acceptable plan to raise the limit on the federal governments authority to borrow money - known as the debt limit or ceiling.

By law, the US Treasury Department may not issue bonds or otherwise borrow money in excess of the debt limit set by Congress. The current debt limit is set at USD 14.300bn (EUR 10.010bn). Because the US governments income from tax revenues and fees covers only about 60% of its daily USD 10bn in outlays, the Treasury Department must borrow money on international financial markets to cover the balance - some USD 4bn/day.

But Treasurys ability to borrow more money - to pay federal programmes and meet other debt payment obligations - is expected to reach the USD 14.300bn ceiling on or about 2 August.

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