Treasury says U.S. will hit debt ceiling in mid-May
The Treasury Department Wednesday issued revised projections of the government's borrowing needs that now show the government will bump up against the current $5.95 trillion legal limit by mid-May.
If the statutory debt ceiling has not been raised by then, Treasury said it will have to use "a number of stopgap devices" to stay under the limit that "have been previously utilized under established legal authority." Treasury said this would enable them to meet the government's borrowing needs until the end of June.
In order to avoid hitting the debt ceiling in April, Treasury suspended investment of as much as $18.7 billion of federal employees' money in the G Fund, the portion of the federal 401k-style Thrift Savings Plan that is normally invested in Treasury securities. Treasury then restored the funds, with interest, after tax receipts started pouring in.
Earlier this week, Treasury announced that because those receipts were lower than expected, it will have to borrow in the second quarter rather than pay down debt.
House Ways and Means ranking member Charles Rangel, D-N.Y., blasted Republicans for budgetary hypocrisy and for squandering the surplus on last year's $1.35 trillion tax cut.
Rangel said, "What the [Treasury] statement does not say is that these so- called devices were considered 'impeachable offenses' to some House Republicans when [former Treasury] Secretary Robert Rubin has to employ some of them."
Rangel also said the Clinton administration left President Bush with a balanced budget, and "Now, just a year later, $4 trillion of those surpluses is gone and the short-term effect is the need for the government to borrow money."
Rangel called for the president and Congress to "work out an honest blueprint to put our fiscal house back in order" before Congress raises the debt ceiling.
Senate Budget Chairman Conrad said, "Treasury's disturbing announcements highlight how irresponsible the Bush administration's fiscal policy has been. By continuing to push for additional tax cuts, without saying how they'll pay for it, the Bush administration is poised to drive this country further into debt to the tune of trillions of dollars."
Also today, the Bond Market Association today sent a letter to House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Tom Daschle, D-S.D., in support of the administration's request to raise the statutory debt ceiling by $750 billion.
"We believe that quick and decisive congressional action to raise the debt ceiling will mitigate market uncertainty and keep the government's borrowing costs as low as possible," the group told the two leaders.
House GOP leaders plan to attach debt ceiling language to the fiscal 2002 supplemental spending bill, which is expected on the floor later this month, although they have yet to decide how high to raise the legal borrowing limit and whether to also include budget enforcement mechanisms.
In the Senate, Daschle said the question of attaching debt limit it to the supplemental was "subject to discussion" that he said would occur "in the next couple of weeks." Daschle indicated he would wait to see what the House sends him.
In another wrinkle Daschle must address, Sens. Phil Gramm, R-Texas, and Russell Feingold, D-Wis., have said they want to amend any debt limit bill with provisions to require deficit reduction and greater fiscal discipline.
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