"The Treasury has now taken all prudent and legal steps to avoid reaching the statutory debt limit, including reducing the size of our regular bill auctions and drawing down available cash," Snow said. "An immediate permanent increase in the debt limit is crucial to preserve the confidence in the U.S. government and to prevent uncertainty that would adversely affect our economic recovery," he said.
In a letter to House Speaker Dennis Hastert, R-Ill., Snow said "it is my determination that by reason of the statutory debt limit, I will continue to be unable to invest fully the portion of the Civil Service Retirement and Disability Fund not immediately required to pay beneficiaries....I have determined that a 'debt issuance suspension period,' previously determined to last until July 11, 2003, will last until December 19, 2003."
Treasury is required to keep track of the interest the fund would have earned had the investments taken place and repay the money after debt crisis passes.
Snow strongly recommended Senate action to "immediately pass the debt limit increase that has already been transmitted by the House." A Senate GOP leadership source said that the increase would likely come up Wednesday or Thursday, but added that it could be pushed all the way to Friday. But action is expected before Congress begins its Memorial Day recess at the end of this week.
The House deemed separate legislation raising the debt limit as passed when it adopted the fiscal 2004 budget resolution. That House proposal would raise the $6.4 trillion debt limit by $984 billion.
In his letter, Snow warned that projected incoming government receipts will not be able to cover government payments coming due by the end of the month, which include $21 billion in individual and business income tax refunds, $40 billion in monthly payments to Social Security recipients, and $12 billion in payments to defense contractors.
Snow did not suggest that those payments would be missed. In past debt standoffs, previous administrations have always found additional ways to juggle the government's accounts until Congress got around to raising the debt limit.