Posted on 05/01/2002 8:45:32 PM PDT by survivalforum.com
Treasury Seeks Borrowing Authority
Wed May 1, 1:05 PM ET By JEANNINE AVERSA, Associated Press Writer
The United States will once again face an unprecedented default on the national debt — this time in mid-May_ unless Congress extends the government's authority to borrow, a request that has been mired in a political fight.
Treasury Secretary Paul O'Neill dodged a default in April by moving federal retirement funds into a non-interest-bearing account, freeing room for more borrowing.
On Wednesday, the Treasury Department (news - web sites) said the debt limit is expected to be hit in mid-May, earlier than the latter-June time frame that O'Neill laid out in an April 17 letter to congressional leaders.
Treasury pushed the date forward because lower-than-expected income tax payments are forcing the government to borrow $1 billion in the April-June quarter. That's a sharp reversal of earlier plans to actually retire $89 billion of the national debt in the quarter.
This is the first time since 1995 that the government has needed to borrow in the April-June quarter, a quarter normally flush with cash from a flood of income tax payments.
O'Neill has repeatedly asked Congress to boost the debt ceiling by $750 billion, but the request has become stuck in a political fight over the budget. The limit now stands at $5.95 trillion.
"No one wants the government to default on its responsibilities," said the House Ways and Means Committee's top Democrat, Rep. Charles Rangel (news, bio, voting record) of New York. "But the people and their representatives have a right to know how the Bush administration plans to get the nation out of this fiscal mess before it authorizes a debt ceiling increase."
If the debt limit isn't raised by mid-May, Treasury said, it can use a number of stopgap measures to stay under the debt limit and avoid a default. Those measures include shifting funds and tinkering with Treasury auction schedules to make room for increased borrowing.
But those stopgaps won't help in the "latter half of June when regularly scheduled payments to Social Security (news - web sites) and other government trust funds will require the treasury to borrow beyond this additional, limited capacity," Treasury warned.
Without such juggling of funds, Treasury would not be able to borrow the money it needs to keep the government operating, including making payments on debt that is coming due.
If those payments are missed, the government would be technically in default on the $5.95 trillion national debt, something that has never happened.
Given that Treasury can take steps to maneuver around the debt limit and that Congress is sure to eventually raise the ceiling, economists said there is never a real danger of a default, which likely would touch off an economic crisis.
Budget experts predict the United States will record a budget deficit for this entire fiscal year, which has not happened since 1997.
The Bush administration has blamed the return of red ink on a recession that began in March 2001 and the costs of waging war in Afghanistan (news - web sites) and battling terrorism at home. But Democrats blame the 10-year, $1.35 trillion tax cut that President Bush (news - web sites) pushed through Congress last year.
To help replenish coffers, Treasury plans to sell $33 billion of new securities at regularly scheduled auctions next week: $22 billion in five-year notes Tuesday and $11 billion in 10-year notes Wednesday.
Story and comments here
We give the government the power to patrol the borders, they don't do a good job, and let enemies in.
These enemies attack us using airplanes, which are declared weapons-free zones by the government.
We attack the places where these enemies came from, and we are asked to pay for that too.
Now, the government asks for more to give lip service to airline security. Airplanes are still declared weapons-free zones.
Sounds like if the government did its initial job better, we wouldn't be paying for all of this too. Or, if the airplanes were not declared weapons-free zones, we'd have stopped them.
We cannot let the rats get away with this. War ain't cheap and we will all pay for it but the deficit spending should be short lived.
I intend to hold them accountable for it. Bush included. Spending cuts will need to be made and dems will fight that too! They will fight everthing except to raise taxes. We have a battle to fight.
And who was running the country then?
Was the U.S. engaged in a war at that time?
Start issuing the pink slips.
"I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude."--Thomas Jefferson to Samuel Kercheval, July 12, 1816
"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."-- Thomas Jefferson to John Taylor, May 28, 1816
AND provoke the much needed 'barn cleaning' that this Country is seriously in need of!
Uh....How 'bout reducing expenditures. Thst's what the majority of "We The People..." must do when faced with a problem like this...
We should aim to cut out a lot of federal spending, while actually paying down the debt, even in the face of higher military spending, since the defense of our nation is truly a function of the federal government.
We no longer need jobs programs for youth, as there is now a great need for manpower in the military.
A part of our prosperity is a result of our sterling credit rating. What would happen to any countries Standard and Poor's credit rating if they even threatened default? Yes, the doom sayers have been predicting collapse, but what if something milder, but nonetheless damaging happens?
We would lose a part of that prosperity.
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