PATRIOT FREEDOM.ORG

from A.B.C.NEWS MAY 19,2003

White House Warns on National Debt Limit

Bush Administration Warns Congress It’s Running Out of Room to Stay Within Debt Limit

The Associated Press

WASHINGTON May 19,2003

The Bush administration warned Congress on Monday it would run out of room by May 28 to juggle the government’s books to stay within the current national debt limit.

Legislation to boost the debt limit by $984 billion the largest increase in history has been caught up in a battle between Democrats and the White House over President Bush’s proposed new tax cuts.

In a letter to congressional leaders, Treasury Secretary John Snow said Treasury set May 28 as the date it would exhaust its avenues for clearing extra room for borrowing. Payments to Social Security retirees and other government obligations would be jeopardized after that time.

“The Treasury has now taken all prudent and legal steps to avoid reaching the statutory debt limit, including reducing the size of our regular bill auctions and drawing down available cash,” Snow said in his letter.

The House has passed a bill to boost the current debt limit of $6.4 trillion to $7.38 trillion, but so far it has been blocked in the Senate by Democrats, who are trying to use the issue to hold down the size of new tax cuts.

Sen. Kent Conrad, D-N.D., criticized Snow’s letter, saying Republican tax-cut policies will push the national debt to $12 trillion by the end of 2013, right before a wave of baby boomer retirements dramatically increases demands on Social Security.

“Two years ago, the president told us we could enact his policies and virtually eliminate the debt held by the public by 2008,” said Conrad, the top Democrat on the Senate Budget Committee. “Now, the Bush administration is urging the Senate to raise the debt limit by almost $1 trillion. It is an unprecedented turn of events.”

Congressional aides said Monday the GOP-run Senate seems likely to begin debating the debt limit bill on Thursday. Democrats will try winning enough votes for a smaller increase than in the House version, which if successful would return the bill to the Republican-led House for a direct vote on the politically sensitive issue.

A lesser boost would also force Congress to revisit the matter before the 2004 presidential elections, giving Democrats another chance to argue that Bush’s tax cuts have driven government deficits to record levels and will saddle future generations with a higher national debt.

Snow said in his letter that an “immediate permanent increase in the debt limit is crucial to preserve the confidence in the U.S. government and to prevent uncertainty that would adversely affect our economic recovery.”

The Treasury Department had to postpone until Tuesday the regular weekly auction of three-month and six-month Treasury bills that normally is held on Mondays. The maneuvering was necessary to draw investments out of trust funds held by the government to make room under the current debt limit to auction more debt to the public.

Snow warned in his letter that Treasury would run out of such maneuvering room and projected incoming government receipts will not be able to cover government payments coming due by the end of the month.

“The Treasury faces payment obligations in late May that cannot be met without an increase in the statutory debt limit,” Snow said.

The payments he listed as threatened included $21 billion in individual and business income tax refunds, $40 billion in monthly payments to Social Security recipients and $12 billion in payments to defense contractors.

Snow did not say what would happen if Congress should not pass the debt limit increase by next week. In past debt standoffs, previous administrations always have found additional ways to juggle the government’s accounts until Congress got around to raising the debt limit.

Bush called congressional Republican leaders to the White House on Monday to discuss strategy on reconciling differences between the tax-cut measures passed by the House and the Senate.

The Senate limited its legislation, passed last week, to $350 billion through 2013, while the House measure proposed $550 billion in tax cuts over the same time frame.

The government’s annual deficit is expected to hit a record this year of more than $300 billion, surpassing the old mark of $290 billion set in 1992.

Republicans say the nation’s jobs deficit, composed of the unemployed who cannot find work, is a bigger problem right now than budget deficits and further tax cuts are needed to promote stronger economic growth.

SOURCE HERE