Treasury says debt limit will be hit by late 2012
WASHINGTON (AP) - U.S. Treasury officials said Wednesday that they still expect the government will hit the current debt borrowing limit at the end of this year. But they said they can employ "extraordinary" measures that have been used in the past to keep the government functioning until sometime early next year.
Treasury Assistant Secretary Matthew Rutherford said that Treasury would employ the same types of procedures it has used previously to keep borrowing under the current debt limit of $16.39 trillion until Congress votes to increase the debt ceiling. The nation's debt currently stands $16.16 trillion.
The United States has never failed to meet its debt obligations although the last battle over raising the debt limit in August 2011 went right to the last minute before a compromise was reached between the Obama administration and Congress.
"We continue to expect that these extraordinary measures would provide sufficient headroom under the debt limit to allow the government to continue to meet its obligations until early in 2013," Rutherford said.
The measures to stay under the debt limit include temporarily removing investments from government employee pension funds to clear room for other borrowing. Treasury officials have not been more specific about the date they will reach the limit of their maneuvering room, but private economists have estimated that the government could continue its borrowing operations under the current limit into early March.
The debate over raising the debt limit is just one of the major budget issues facing Congress. Lawmakers and the administration will also need to reach agreement on a budget reduction plan to avert tax increases and across-the-board spending cuts from taking effect in January. Economists have warned that if this so-called fiscal cliff is not avoided, the adverse effects on the economy could push the country back into recession.
Rutherford's comments on the borrowing limit came as Treasury announced the details of its regular quarterly refunding auctions.
Treasury said at the auctions next week it would sell $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds.
The debt auctions will be part of an effort to raise $288 billion during the October-December quarter. That compares to $264 billion in net borrowing that Treasury did during the July-September quarter. Treasury says it expects to borrow $342 billion during the January-March quarter of next year.
These sizable levels of borrowing are being required because the government is running record deficits. For the 2012 budget year, the deficit totaled $1.09 trillion, the fourth consecutive year that the deficit has been over $1 trillion.
Treasury Assistant Secretary Matthew Rutherford said that Treasury would employ the same types of procedures it has used previously to keep borrowing under the current debt limit of $16.39 trillion until Congress votes to increase the debt ceiling. The nation's debt currently stands $16.16 trillion.
The United States has never failed to meet its debt obligations although the last battle over raising the debt limit in August 2011 went right to the last minute before a compromise was reached between the Obama administration and Congress.
"We continue to expect that these extraordinary measures would provide sufficient headroom under the debt limit to allow the government to continue to meet its obligations until early in 2013," Rutherford said.
The measures to stay under the debt limit include temporarily removing investments from government employee pension funds to clear room for other borrowing. Treasury officials have not been more specific about the date they will reach the limit of their maneuvering room, but private economists have estimated that the government could continue its borrowing operations under the current limit into early March.
The debate over raising the debt limit is just one of the major budget issues facing Congress. Lawmakers and the administration will also need to reach agreement on a budget reduction plan to avert tax increases and across-the-board spending cuts from taking effect in January. Economists have warned that if this so-called fiscal cliff is not avoided, the adverse effects on the economy could push the country back into recession.
Rutherford's comments on the borrowing limit came as Treasury announced the details of its regular quarterly refunding auctions.
Treasury said at the auctions next week it would sell $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds.
The debt auctions will be part of an effort to raise $288 billion during the October-December quarter. That compares to $264 billion in net borrowing that Treasury did during the July-September quarter. Treasury says it expects to borrow $342 billion during the January-March quarter of next year.
These sizable levels of borrowing are being required because the government is running record deficits. For the 2012 budget year, the deficit totaled $1.09 trillion, the fourth consecutive year that the deficit has been over $1 trillion.
"Bush tax cuts: The real endgame"...but who listens to the CBO ??
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http://money.cnn.com/2012/01/31/news/economy/cbo_budget_economy/index.htm
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Does anyone remember o'neil ??  Ya, it's all obamas fault, well if you ignore what the first sec. of treasury told the village idiot what would happen if he did institute those tax cuts !
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"O'Neill had been preaching that a fiscal crisis was looming and more tax cuts would exacerbate it."
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Ya , lets ignore the facts....we're reichwingers...woooopy !
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http://www.time.com/time/magazine/article/0,9171,574809,00.html
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Well, to clear this debt thing up, we should give everyone a 20% tax cut and jack up defense spending by $2 trillion.
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George W. Bush increased the national debt by 72%. And we wasn't dealing with the effects of the Great Recession. And all the while, conservatives cheered him along. Thus, conservatives have no credibility on this issue - as co-president Cheney once said, "Reagan proved that deficits don't matter." Anyone who thinks that the deficit can be brought under control without tax increases and spending cuts is deluding themselves.
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And spare me the Laffer Curve BS about tax cuts spurring growth and thereby increasing revenue. St. Reagan said the same thing and it made him the patron saint of deficits.
laugher curve......'nough said !
 @Max Quinn Reagan raised the debt ceiling 17 times. Clinton balanced, GWB raised it 7 times, Obama raised it once (and it was held hostage).
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Bush started with 6.4 trillion limit, by the time he was done it was 11.3 trillion.....that guy really destroyed us.
And they did not bring this up during the debates!
 @portlandborn83 Of course not, it's a real issue, neither party has a viable answer, and they have to keep up their facade of being different.
Under 0bama's watch the national debt has climbed from 11.9 trillion to 16.22 trillion. That's a 40% increase.
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The national debt is climbing at a rate of over 1.33 million per minute every minute of every day for the whole year.
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By 2016 the national debt will be 22.5 trillion at current spending levels. That is another 40% increase.
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As we head into another recession, and yes we are in a recession, tax revenues will decrease and the debt will increase significantly.
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It would be like a two income household where every penny goes to pay the bills. Now one of those income earners gets laid off. The bills remain the same but the income is much less. This means that in order to survive they would have to borrow more money to pay the interest in what they already owe. Of course this can't go on forever and will come to a dramatic end. The US is no different.
And what was the percentage of the increase due to putting iraq-afghanistan on budget ??? When was that ....hmmmm
 @sargerator How much has been added by continuing the wars? If Obama has ended them (ALL) when he claimed he would the spending would have drastically subsided, but yet the CIA dropping bombs on Pak. wedding parties er terrorists on a daily basis.