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
But who is the government? The taxpayers. We're in debt to hundreds of government social programs which are skyrocketing out of control. We should cut all welfare including WIC, food stamps, Medicaid, HUD, Headstart, etc and we can finish off that debt.
You wrote....
Long live the debt. I actually hope it grows.
Guess how much the Interest per H-O-U-R is on the National Debt...
then GoTo: DEBT! and see just how much the Interest/HR really is.Have a good day!
Cliff Cofer - West Des Moines, Iowa
I last updated it on 4.10,2002, but it's got a lot of data there. (Which is why it gets updated only every so often).
If it's unprecedented, how can we once again be facing it?
Take a look at the above. How can something happen again if its unprecedented? Either (Choose as many as you like):
A) The writer from the AP is a total idiot.
B) The writer from the AP is a total idiot but the story is true because spending on social welfare handouts remains high.
C) This is nothing but ill contrived propaganda to make the current administration look bad.
D) The writer is screaming "The sky is falling" so his next article will be to repeal the tax cut or have cuts in defense spending.
Sam is both young and naive. If he thinks for one minute that with the collapse, there will be anything other than chaos, he is very wrong. I was around when all of this borrowing started, spending ones future for today, is a fools economy.
Hear hear! Alas, there is no huge quantity of people beating a path to the local recruiter's office, though. People like me are told about the stop-loss, while the rest of America yawns, asking 'We have American's over there?'
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