Treasury Dept. Moves to Avoid Debt Limit

[cal04]

Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national
debt limit. In a letter to Congress, Snow urged lawmakers to pass a new debt ceiling immediately to avoid the nation's first-ever default on its obligations.

"I know that you share the president's and my commitment to maintaining the full faith and credit of the U.S. government," Snow said in his letter to leaders in the House and Senate. Treasury officials, briefing congressional aides last week, said that the government will run out of maneuvering room to keep from exceeding the current
limit sometime during the week of March 20. Snow in his letter notified lawmakers that Treasury would begin tapping the Civil Service Retirement and Disability Fund, which Treasury officials said would provide a "few billion" dollars in extra borrowing ability.

Treasury officials also announced that on Friday they had used the $15 billion in the Exchange Stabilization Fund, a reserve that the Treasury secretary has that is normally used to smooth out volatile movements in the value of the dollar in currency markets. Treasury has also been taking investments out of a $65.3 billion government pension fund known as the G-fund. Officials have said that once the debt limit is raised, the investments taken out of the pension funds would be replaced and any lost interest payments would be made up. The formal title for the G-fund is the Government Securities Investment Fund of the Federal Employees Retirement System.

Democrats hope to use the upcoming congressional debate over raising the debt limit to highlight what they see as the failings of the administration's economic program with its emphasis on sweeping tax cuts. An actual default on the debt, a situation when the government misses making payments to current bondholders, is a doomsday scenario considered highly unlikely given what it would do to the government's credit rating. It is expected that after intense debate, Congress will approve an increase in the current $8.18 trillion debt limit by perhaps $781 billion.

http://news.yahoo.com/s/ap/20060306/ap_on_go_ca_st_pe/federal_debt_4

[rodeodance]

1. tapping certain government retirement funds,

Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds,

[jaxx]

3. Who's retirement funds? Social Security again?

[noamnety]

41. It's not social security. It's 401k's.

They're stealing from the 401k's of people that spend their life working for the government. Basically, they're pulling an Enron on us - it's money we opted to contribute out of our paychecks to our 401k's, and they can't keep their freaking hands off of it.

[Lindsay]

2. The borrow and spend Repugs strike again.

And again and again....

[Nickster]

4. ""I know that you share the president's and my commitment to maintaining

the full faith and credit of the U.S. government,"


Umm, try Constitutional obligation to maintain the full faith and credit of the US Govt.

[indypaul]

5. Let's have another tax cut . n/t

[Lorien]

6. They started with a 7.2 Trillion surplus

and now have an 8.2 Trillion deficit? Way to go guys. :eyes: :grr:

[muriel_volestrangler]

7. No - this is 'debt', not 'deficit'

'Debt' is the accumulated money the government owes; 'deficit' is the yearly difference between what it takes in in taxes etc. and spends. There has been a debt for many decades, though it has got much larger recently, due to the deficits run most years (but not at the end of Clinton's presidency). I don't know wher you got "7.2 trillion surplus" from.

[Lorien]

10. The 7.2 Trillion dollar surplus number was what Clinton left to Bush jr.

widely touted (may have been 7.1-it was a staggering number anyway).

[muriel_volestrangler]

18. Here's the actual figures

President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion.

"Eight years ago, our future was at risk," Clinton said Wednesday morning. "Economic growth was low, unemployment was high, interest rates were high, the federal debt had quadrupled in the previous 12 years. When Vice President Gore and I took office, the budget deficit was $290 billion, and it was projected this year the budget deficit would be $455 billion."

Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years -- $223 billion this year alone.

http://archives.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/

As you can see, there was still a debt after Clinton; it had just been decreasing rather than increasing. Paying off the national debt of the USA, and most countries in the world, would be almost impossible (though Norway has managed it, with its large oil revenues, and I think some OPEC members will have net government credit rather than debt). In fact, some economists think a manageable national debt is a good thing, because pension funds invest in it as an extremely safe option (in Britain, at least, there is a term "gilt-edged" which means 'top quality'; it comes from the certificates for government debt, which used to have a gold-coloured border).

[slaveplanet]

45. Treasury Debt

the 8.2T is Treasury debt, and it doesn't even come close to the accumulated amount the government owes. Some economists conservatively place the total debt @ 10 times the Treasury debt. A mind boggling number worth more than all the property in America combined. We are beyond broke.

They will continue to raise the treasury debt ceiling to forestall the inevitable.

Then it'll be newsflash, everything crash...

[muriel_volestrangler]

46. Have you any more details on that?

I hadn't heard that before. What are the other kinds of government debt? I know there's state and local government debt, but I thought that is smaller than the federal debt - maybe $2 trillion.

[slaveplanet]

48. there was a report done by 2 economists

in 2003 right before the Tax cuts bill. In it they Cited the GAO figure of America's total value at 39T and our current debt @ 43T but I've also heard that currently that is more like 72T after Bushco current spend and Loot policies.
The report was left out on purpose when Snow and Bush went for the Tax cuts.

Here's the msn article from 2003...

The government's $43 trillion secret
http://moneycentral.msn.com/content/Taxes/P49070.asp

Long before the latest tax cut, the government got word that its long-term obligations are 10 times the amount previously thought -- and promptly buried the study.

By Scott Burns

On Friday, May 16, the word was out. A $350 billion tax cut was a done deal.

So why did the stock market sink that day? Why did it plunge the following Monday, losing 2.5% of its value?

One possible explanation is Treasury Secretary John Snow and his comments on the dollar. Another is concern about new terrorist attacks. But let me suggest a third possibility: In spite of efforts to suppress it, word is getting around we can't afford a tax cut.

The story starts one night in January, only days after Treasury Secretary Snow had replaced Paul O'Neill.

Two men were leaving a restaurant in Santa Fe, N.M. A cell phone rang. The caller told Boston University economist Laurence J. Kotlikoff that six months of work by two economists was going to be deleted from the president's budget. The budget was due to be published in February. I know this happened, because I was the second man: Professor Kotlikoff was in Santa Fe working on a book project with me.

The material to be deleted from the budget document was an updating of generational accounting. Former Treasury Secretary O'Neill had requested an estimate of the true, long-term obligations of the U.S. government.

The estimate would include the formal debt of the U.S. Treasury plus equally serious government promises to provide retirement income and medical care. (Readers who think promises of Social Security and Medicare aren't as serious as U.S. Treasury bond promises should visit the nearest elderly person.)

The resulting information might easily have been lost in a document whose online girth is measured in megabytes.

Except for one thing.

The new accounting shows the United States is broke.

Buried, but not forgotten
The study shows the true obligations of government were 10 times larger than Treasury debt held by the public. It shows the present value of these unfunded obligations is a mind-numbing $43 trillion.

In a recent telephone conversation I asked one of the project economists, Jagadeesh Gokhale, why he thought his work was cut. Dr. Gokhale, a senior economist for the Federal Reserve Bank of Cleveland, was circumspect. He suggested the figures were a surprise to the new Treasury secretary.

Here's another interpretation: Treasury Secretary Snow's first task was to sell the president's tax cut. The sales job would be awkward if an official government document announced we were already $43 trillion in the hole. (The Federal Reserve, by the way, recently put the net worth of all households at $39 trillion. This problem goes way beyond taxing the rich, the poor or the middle class.)

So the generational accounting figures disappeared from the budget.


more @ link

[muriel_volestrangler]

49. OK, that's 'unfunded obligations'

which aren't quite the same as debts - they can be decreased either by increasing taxes, or decreasing spending on Social Security and Medicare. Comparing them to the total assets of the country isn't really relevant. That's not to say they're not important - but doing things like reversing Bush's tax cuts could do a lot to get rid of them in the long term. See, for instance, a Paul Krugman article from 2004.

[Roland99]

13. Hunh? You have a link for that?

Clinton didn't leave anything remotely resembling that.

[sadiesworld]

16. Projected.

And while it's somewhat BS it can hardly be argued that Clinton wasn't moving in the right direction. Of course, *'s tax cuts, wars and crony deals have long since undone any gains--real or projected.

[Roland99]

17. Oh, the pay-as-you-go and balanced budgets were awesome!

The only time in my lifetime that the government was going in the right direction to lower the national deficit.

But, everyone worth their salt knew the meteoric rise of the markets was fraudulent. I was warning people back in 1999 to get out of NASDAQ before the crash.

A projected surplus is meaningless in the face of false markets like we had with the dot-com boom. We're seeing something more widespread now but not as obvious which is what scares the crap out of me now.

The 2000 dot-com bust will seem like the Roaring 20s in the coming years.

[joanski0]

8. Harry Reid said on the Senate Floor on Friday

that Democrats will "not" vote to raise the debt ceiling. He said Grassley want to do it right before a recess and by voice vote so no one will see the Repukes voting to raise the debt. Harry then said that all 55 Republicans will have to belly up to the bar and vote for it in the light of day. I hope he says more about it today, after receiving Snow's letter.

Senate comes in at 1:00 p.m. today. Gotta go!

[Up2Late]

9. Just a reminder, 09/30/2000 the debt was $5,674,178,209,886.86

09/30/2003 $6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16

Clinton Years------------------------------
09/28/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66

<http://www.toptips.com/debtclock.html>

These numbers are from a old Debt Counter page that I think the owner might have stopped updating, but it does include this bit of history:

May 27, 2003 NOTE: Today a bill was signed that increases the Debt limit to a new high of $7.4 Trillion dollars. Just prior to the singing, the Debt was $6.4 Trillion and immediately jumped up $82 Billion. I wonder how long it will take "your" elected representatives in Congress to "borrow" a additional Trillion dollars?

The Debt Clock above shows the rate at which two things are happening. It shows the National Debt and it shows the spending in the current fiscal year. It also shows how much the Federal Govt. spent since your browser accessed the Debt Clock.

The Fiscal Year Spending shows how fast the Federal Government spends what was budgeted for the year. This spending occurs even with a balanced budget. It is the normal spending of the budget.

The debt increases because the U.S. Government spends more than it collects in taxes. This is called deficit spending. We have such a large debt because Congress has consistently spent more than it has collected for the past 20 years!

If we had a balanced budget TODAY, the debt would continue to increase slightly due to interest and overhead. We would still have the current debt of over $6.5 Trillion.

We have to start developing a budget "surplus" to begin to pay off the debt.

[54anickel]

39. You can see the rest of the fiscal years here - not a pretty site!

http://www.publicdebt.treas.gov/opd/opdpenny.htm

Current Amount

03/03/2006 $8,270,568,938,276.67


Current
Month

03/02/2006 $8,270,651,337,575.14
03/01/2006 $8,269,768,312,946.41



Prior
Months

02/28/2006 $8,269,885,515,386.04
01/31/2006 $8,196,070,437,599.52
12/30/2005 $8,170,424,541,313.62
11/30/2005 $8,092,322,205,720.65
10/31/2005 $8,027,123,404,214.36


Prior Fiscal
Years

09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/28/2001 $5,807,463,412,200.06
09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38
09/30/1992 $4,064,620,655,521.66
09/30/1991 $3,665,303,351,697.03
09/28/1990 $3,233,313,451,777.25
09/29/1989 $2,857,430,960,187.32
09/30/1988 $2,602,337,712,041.16
09/30/1987 $2,350,276,890,953.00

[Bandit]

11. National Debt is growing at a rate of $100,000.00 per second

This truly is mind boggling.

http://www.toptips.com/debtclock.html

Scroll down just a little and wait four seconds for it to load.

[Earth_First]

14. It's mindboggling to watch that debt clock accrue...

literally spending a minute there watching, 8.3M was accrued while I watched.

[pinniped]

12. It seems every month Snowjob asks for the limit to be raised.

.

[Coexist]

15. k & r

[johnnyrocket]

19. This is the most disgusting abuse of government: The deficit and debt

...they're the work of moral cowards to keep spinning a "have it all" mentality: low taxes, wars, benefits, disaster funds, etc....this is going to destroy us if we don't get the budget in line, ASAP.

[subterranean]

20. They do this every year

They don't even bother changing the wording of Snow's letter.

Replaying a drama from last year, the government is once again bumping against the debt limit of $6.4 trillion and the Treasury Department has begun taking evasive actions to prevent an unprecedented default on the national debt.

Treasury Secretary John Snow informed leaders of Congress on Wednesday that the government would reach the borrowing limit on Thursday and he would begin pulling investments out of a $48 billion government pension fund to make room for normal public borrowing auctions.

...

"I know that you share the president's and my commitment to maintaining the full faith and credit of the U.S. government, especially at this critical time," Snow said in his letter.

--February 20, 2003

http://www.cnn.com/2003/ALLPOLITICS/02/20/debt.limit.ap/

[CabalPowered]

34. Copy and paste makes for efficient government

:sarcasm:

Welcome to DU

[Fire Bush]

21. I wonder how many of these guys have off shore bank accounts

So when this country goes belly up, their fortunes will be safe and sound.

[katty]

22. Admin Ask Congress to Up Debt Limit (on to $8.2 TRILLION)

cont'd: http://www.msnbc.msn.com/id/11699012/

Administration asks Congress to up debt limit

Retirement funds tapped; U.S. will pass $8.2 trillion ceiling around March 20

Win Mcnamee / Getty Images "I know that you share the President’s and my commitment to maintaining the full faith and credit of the U.S. government,” Treasury Secretary John Snow wrote in asking Congress to raise the limit.
View related photos


Updated: 12:54 p.m. ET March 6, 2006
WASHINGTON - Treasury Secretary John Snow notified Congress on Monday that the administration has now taken “all prudent and legal actions,” including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.

In a letter to Congress, Snow urged lawmakers to pass a new debt ceiling immediately to avoid the nation’s first-ever default on its obligations.

“I know that you share the president’s and my commitment to maintaining the full faith and credit of the U.S. government,” Snow said in his letter to leaders in the House and Senate.

[phantom power]

23. And when it hits 8.2T, they'll get permission to up it to 8.5T....

wash, rinse, repeat...

[cliss]

25. It may not get there.....

Even as we speak, other countries are starting to look at us like a possible credit risk. Many countries are wanting to unload their dollar holdings. China said last year it would "divest its portfolio from its dollar holdings and switch into other currencies". Iran as we know is planning a Euro bourse at the end of this month.

When that happens, our creditors (Japan, China, SA) will start to lose faith in us. In my opinion, we will never GET to the part of 8.5 trillion.

They'd like to though......

[phantom power]

27. Other countries will eventually stop us.

Clearly, we can no longer control ourselves.

[central scrutinizer]

24. Borrow and Spend Party

Like drunken pirates on shore leave with stolen credit cards

[pfitz59]

26. "Pay-go!"

Darn those "tax-and -spend" Democrats, and their notion of fiscal responsibilty!

[katty]

29. perfect image-binge spenders

[UpInArms]

28. this crapweasel maladministration has taken the debt to an astronomical

level

:banghead:

and this stupid mind-blind congress has aided and abetted the theft.

http://www.publicdebt.treas.gov/opd/opdpenny.htm

The Debt To the Penny

Current           Amount

03/02/2006        $8,270,651,337,575.14


 Current
  Month

03/01/2006        $8,269,768,312,946.41

<snip>

09/28/2001        $5,807,463,412,200.06
09/29/2000        $5,674,178,209,886.86
09/30/1999        $5,656,270,901,615.43
09/30/1998        $5,526,193,008,897.62
09/30/1997        $5,413,146,011,397.34
09/30/1996        $5,224,810,939,135.73
09/29/1995        $4,973,982,900,709.39
09/30/1994        $4,692,749,910,013.32
09/30/1993        $4,411,488,883,139.38

I gave the entire years of the Clinton admin - the debt increased approx $1.4 Trillion during that period.

It has increased more than $2.5 Trillion in 5 years under this utterly assinine fiscal policy that belongs to George Walker Bush.

[m0nkeyneck]

30. hopefully they didn't literally say 'up' it

[MGKrebs]

31. Aww, that debt is just IOU's in a filing cabinet anyway.

So American retirees are supposed to feel like "just an IOU" from the government isn't good enough for their retirement security, but foreign investors are supposed to continue to feed the fire?

[davekriss]

38. That's amazing, isn't it?

What a signal of things to come! Respect for the global investor class over the well-being of our own citizens. Tragic, really, but they're preparing ... Rex84, the Haliburton detention centers, appointment of John Negroponte as National Intelligence Director, TIA in a dozen different names, NSA warrantless taps, Aito on the SCOTUS with his intellectually bankrupt notion of the "unitary executive", Wolfowitz lapping his comb at the World Bank, Peak Oil, globalism and Global Warming, ice sheets sliding off of Greenland -- we're in for one hell of a ride these next several decades, that's for sure!

[worldgonekrazy]

32. Those fuckers

Raiding retirement accounts. Jesus, they are really mortgaging the future here. Almost makes you think they believe there will be no tommorow or something.

[Az_lefty]

33. Yep, Raptures right around the next cornor...no need to worry.

:hide:

[paineinthearse]

35. How do you know....

the rapture has not already happened???

[THUNDER HANDS]

36. can someone answer a question for me

how are we not a 3rd world country if we have so much debt. My understanding of debt is that if you have it, you're poor.

[roseBudd]

37. Click through and vote it a 5, it only has 12 votes

[Pastiche423]

40. What does it exactly mean when they say...

they would begin tapping the Civil Service Retirement and Disability Fund?

Does tapping mean take money away from the people those funds go to?

My apologies for my ignorance.

[pa28]

42. Big spending big government Neocons. 8,200,000,000,000.00 and growing!

And Republican Presidents are responsible for ALL OF IT.

http://www.dkosopedia.com/index.php/Data_on_National_Debt_by_President

Here is a guy who blew several businesses even with big financial backing from his dad and his buddies. And . . . surprise! He mangled the nation's budget viability for decades to come and maybe permanently. Bush himself may end up compiling as much debt as all Presidents before him put together.

Really this is no surprise to anyone who happened to be paying attention . . . and yet this spoiled punk was put in charge of the most powerful nation on earth.

[roguevalley]

43. fuck. Impeach. now.

[radfringe]

44. Debt Limit is a big fat joke

This is so freaking ridiculous. Why the F@*K bother with a debt limit at all? It's an empty hat.

The purpose of limits is to set a line that you do not cross. You go this far and stop.

It has no meaning when that line is so easily moved. It's like an chronic life-time alcoholic saying "one more drink won't hurt, then I'll stop..." - then that "one more drink" becomes another "one more drink"

[AndyA]

47. Bush with America's money is like a whore with a new box of condoms!

Just going crazy! Screwing everything in sight!

[WhiteTara]

50. there goes my social security

for those criminals spending spree. :grr: I hate them. I hope that some day soon we get rid of them. And I mean ALL of them. The entire PNAC crowd.

[rusty charly]

51. this was posted on americablog- nausea inducing:

Wake up! This administration has been about ONE THING and one thing only.

The religious right agenda, the wars-for-oil, the subversion of the media, etc …all smokescreens.

This administration only took power to do one thing:

TO TRANSFER THE PUBLIC WEALTH OF THE RICHEST COUNTRY IN THE WORLD INTO PRIVATE HANDS.

This administration has been straight-arrow loot-and-pillage on an epic scale. If Guiness had a world record book of crime, this is it, folks, the crime of the millenia. The wealth of the wealthiest country has already been looted, robbed and diverted from public coffers and banked in the accounts of private contractors, armament industries, communication and energy companies, favorite drug companies (what do you think the Medicare change was about?) and private buddy corporations during the last 5 years.

What’s truly horrifying is it wasn’t just the surplus the administration inherited or revenue from the last 5 years. This deficit will have our kids and grandkids enslaved and endebted throughout their lifetimes. The services designed for their benefit have been and will be cut to fix this ‘money problem.’

That’s a killer coup, eh?

Not just to steal the money, but to steal it in such a way that an entire nation will work 2-1/2 lifetimes, with far fewer safety nets, to try and replace it. And then to set up a bunch of new tax cuts for the wealthiest (ie: the beneficiaries of all our public money) that insures they and theirs will never have to be responsible for paying back any of it!

Period.

That’s what all about, the erupting scandals, Bush never vetoeing a bill, that’s why we went to war.

It’s all about the money.

We’ve all been hosed, by leaders who haven’t hesistated to leave 3 generation of American tax payers naked and bleeding on the ground, and 1000s of people dead and bleeding in the sands of the Middle East. (1000s so far. Just watch…this has been too much fun for them, like taking candy from a baby, can’t turn the war milk cow into hamburger yet.)

It’s too late. We’re all screwed and they’re rich beyond a glutton’s wettest dream.

They stole America’s money.

We let them.

It’s gone.

Better wake up before the administration finally figures out how to transfer Social Security — the last, vast, untapped oil field of federal and public monies — into the pockets of the brokerage house.

[flashdebadge]

52. This is one reason that makes me wish I had a PRIVATE RETIREMENT ACCOUNT!