Snow urges Congress to raise debt limit

Yahoo! News ^ | 12/29/05 | Reuters

[libertarianPA]

WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow warned lawmakers on Thursday that a legally set limit on the government's ability to borrow will be hit in mid-February and urged Congress to raise it quickly.

Failure to do so potentially risks throwing the country into its first default in history, Snow warned in what has become virtually an annual rite as U.S. borrowing needs spiral.

"The administration now projects that the statutory debt limit, currently $8.184 trillion, will be reached in mid-February 2006," Snow said in a letter to 21 members of the U.S. House of Representatives and Senate released by Treasury after financial markets had closed.

Snow said that Treasury, if the debt limit was not raised by then, would have to take "extraordinary actions" to keep paying its bills for everything from Social Security to national defense spending.

Even if Treasury took "all available prudent and legal actions to avoid breaching the statutory debt limit, we anticipate that we can finance government operations no longer than mid-March."

The debt limit was last raised in November 2004 by $800 billion to its current level. The letter to Congress does not specify an amount the Treasury wants the ceiling set at this time.

But he said quick action was needed to preserve the U.S. ability to borrow in global capital markets at the lowest rates possible.

"A failure to increase the debt limit in a timely manner would threaten this unique and important position," Snow said.

The call for an increase in the debt ceiling typically provokes a round of criticism from opposition politicians over excessive government spending and the process is drawn out until nearly the last possible moment.

Treasury officials had said in November it was bracing for hefty borrowing needs in the January-March quarter, likely around a record $171 billion, and that it likely would hit the debt limit in that period.

Among other factors, the Treasury cited increased spending for rebuilding Gulf Coast areas hit hard by hurricanes Katrina and Rita.

[Glenn]

The only measure that matters in a real sense is the debt to GDP ratio, not the dollar amount.

Amazing point of view.

[Uncle Vlad]

I don't know what to do about these people. If you vote for the Democrats, who are now run by the far-Left cook fringe, the country goes to hell immediately. If you vote for the GOP, the country still goes to hell, but it will take a little while longer. Either way, we all end up in the same place. I can't vote for the Libertarians anymore, because they're all basically flakes who would rather be "right than elected."

I've never stayed home on election day, but the choices look less and less attractive all the time.

[conservativehoney]

-I'm new here, so I'm hoping I'm posting this to the right spot...
Didn't we raise the debt limit just a few months ago? And if it is raised again what will the effect be on the dollar? (I just returned from vacation overseas, to a place I've been going to for the last 7 years.) I used to be able to buy jewelry, or almost anything really cheaply over there, but I could not even afford to buy a taxi ride from the airport to my hotel room this time round. Will this move devalue the dollar further?

[montag813]

That's it, just keep on spending. Keep on wasting billions on duplicative defense and security pork while leaving the border wide open. Keep depending on Chinese purchases of treasury debt to support our addiction to the welfare state, while China builds up cash and plots against us with Al Queda and South America. This cannot end well.