Republicans in Congress just 0.0003% close to defaulting on federal debt

Originally Posted by Reuters.com

WASHINGTON, Nov 15 - The U.S. Treasury Department on Monday postponed announcing a four-week bill auction to avoid piercing the limit on federal borrowing, and said Congress needed to raise the statutory debt ceiling this week.

The offering delay had been expected after Treasury last week said it had no authority to issue the bills that would have settled on Thursday, the day extraordinary measures used to skirt the debt limit are set to run out.

The Treasury Department said it was in talks with the House of Representatives and the Senate on the issue, and said it was essential lawmakers act as soon as possible to lift the limit.

"It would be unthinkable that Congress did not pass the debt limit legislation," Treasury spokesman Rob Nichols told a press briefing. "I believe we have made clear the critical importance of Congress acting on the debt limit."

Since early October, the Treasury Department has been hovering near its $7.384 trillion limit on federal borrowing. It has alerted Congress that accounting maneuvers to keep the U.S. below its debt ceiling would run out on Thursday.

The most recent Treasury data showed U.S. debt subject to limit at $7,383,975,000,000 -- just $25 million or 0.0003 percent below the debt limit.

Failure to raise the limit could lead to a government default on the debt its borrows, but Congress has never allowed this to happen.

Lawmakers are expected to vote before Thursday to increase the debt ceiling, possibly by as much as $800 billion, a Senate aide said. The aide, speaking on condition of anonymity, said a Senate vote on increasing the limit could come before noon on Wednesday.

The House of Representatives would then need to vote on the bill passed by the Senate for the increase to take effect. House speaker Dennis Hastert, an Illinois Republican, said he was keen to get the move out of the way.

"Whatever we get done is fine. Just get it done," he said.

The Republican-led Congress avoided increasing the borrowing limit before the Nov. 2 election as leaders did not want to have the politically sensitive vote.

Democrats, who have been pushing hard for a stand-alone vote on the debt limit, will likely use the debate to attack President George W. Bush's economic policies, which they say have turned the fiscal surplus he inherited into a record deficit.

Some Republicans wanted to tack the debt limit measure on to a huge spending package encompassing remaining unpassed spending bills for the 2005 fiscal year that lawmakers are working on. But other Republicans fear that could complicate the already tricky spending discussions.

Hastert said it "makes the bigger bills harder to pass" if they have extras stuck on to them.

Also, it is not clear whether the omnibus bill will be ready for congressional approval before Thursday.

Treasury's Nichols said the department would make decisions day-to-day on further emergency measures required to keep the government's financing below the statutory limit ahead of the Thursday deadline.

"As we are running up to that date, we are taking the prudent steps to protect the full faith and credit of the U.S. government," he said. "We are continuing to take those steps."

Originally Posted by JuddL

You guys make it seem like the Republicans want the system to collapse. Even if they are the avaricious, money hording, corporate sell out sons of bitches you make them out to be; even if that is the case, they still require the system to function in order for any of it to be worthwhile to them. Whether their decisions ultimately turn out for good or bad, you cannot possibly think they're stupid enough not to realize that, can you?

Originally Posted by Stormin

Pardon my ignorance, but if we do hit the national debt limit, what does it mean that it would 'default?'

What ungodly thing would happen?

Originally Posted by The New York Times

Nov. 17 - Faced with the prospect of a government unable to pay its bills, the Senate voted on Wednesday to raise the federal debt limit by $800 billion.

Though an increase in the debt ceiling was never in doubt, Republican leaders in both houses of Congress postponed action on it last month, until after the elections, to deprive Democrats of a chance to accuse them of fiscal irresponsibility.

The bill, if approved by the House in a vote expected on Thursday, would authorize the third big increase in the federal borrowing since President Bush took office in 2001. Federal debt has ballooned by $1.4 trillion over the past four years, to $7.4 trillion, and the new ceiling would allow borrowing to reach $8.2 trillion.

With no end in sight to the huge annual budget deficits, which hit a record of $412 billion this year, lawmakers predicted on Wednesday that the new ceiling would probably have to be raised again in about a year.

Democrats, still stinging from their election defeats, voted against the measure and argued that it should be accompanied by rules that would force Congress to pay for new tax cuts with spending cuts or tax increases elsewhere.

"I don't remember anyone during the elections making a promise to raise the federal debt to $8.1 trillion," Senator Kent Conrad, Democrat of North Dakota, said. "What we're doing here is just writing another blank check and saying to this administration, 'Go ahead, continue to run record budget deficits.' "

Administration officials have been pleading for an increase in the debt limit since last August, and the Treasury Department has been tapping into Civil Service retirement accounts since Oct. 14 to avoid breaching the limit.

On Tuesday, Treasury Secretary John W. Snow warned that the administration had "exhausted" all the previously used financial maneuvers. The government can probably keep paying bills until early next month, but the Treasury Department would have to postpone an auction of new Treasury securities scheduled for Monday.

Raising the legal borrowing limit has long been more political theater than substantive decision making, because lawmakers ultimately have no choice in the matter if the government is to stay in operation.

The 52-to-44 vote was almost purely along party lines, with one Republican, Senator John Ensign of Nevada, voting against a higher ceiling.

Two Democrats, Senators John B. Breaux of Louisiana and Zell Miller of Georgia, voted in favor of the measure.

Some Republican lawmakers had hoped to bury the measure in a broader spending bill that would attract less attention and that many Democrats would feel compelled to support. But Senate leaders decided to vote on a stand-alone bill in exchange for a commitment from Democrats to limit the debate.

"We've come to a general agreement to move ahead today," Senator Bill Frist, the majority leader, said. "The House literally is waiting for us to act."

In a muted floor debate, Democrats did almost all the talking - all aimed at castigating the administration and its Congressional allies for indulging in "borrow and spend" policies - while Republicans grimly waited for the debate to end and the vote to begin.

Senator John Kerry of Massachusetts, in his first appearance on the floor since losing the presidential election, said the growing debt threatened economic security.

"To pay our bills, America now goes cup in hand to nations like China, Korea, Taiwan and Caribbean banking centers," Mr. Kerry said. "Those issues didn't go away on Nov. 3, no matter what the results."

Administration officials contend that the annual deficits are undesirable but necessary to help stimulate an economic recovery and fight a global war on terrorism.

Mr. Bush has promised to reduce the deficit by half over five years, though the administration is fighting to make its tax cuts permanent and may need more than $70 billion in extra money next year to support military operations in Iraq.

House Republicans said they would schedule a vote on the bill for Thursday evening.

"We'll get it done," John Feehry, a spokesman for House Speaker J. Dennis Hastert, said. "We have an obligation to keep the government in operation."