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Whitehouse urges raise debt ceiling { May 20 2003 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A12730-2003May19.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A12730-2003May19.html
White House Urges Senate To Raise Debt Ceiling Soon
GOP to Face Issue While Pushing Tax Cut
By Helen Dewar and John M. Berry
Washington Post Staff Writers
Tuesday, May 20, 2003; Page E01
The Bush administration warned the Senate yesterday that it must increase the government's debt ceiling by May 28, putting new pressure on Republicans to acknowledge mounting debt as they push to enact President Bush's tax cuts. It is a coincidence of timing that Democrats are eager to exploit.
Even before the formal warning, Senate GOP leaders had scheduled a vote on raising the debt limit for later this week, just before Congress leaves for a week-long Memorial Day recess. Republicans said they believed they had the votes to pass the measure without amendment, probably by Thursday.
But the warning underscores the necessity for prompt action, providing ammunition to Republicans in arguing against amendments that would force the measure back to the House, which is famously skittish about debt bills.
Treasury officials said yesterday that they had found room to borrow an additional $20 billion, allowing the sale of more Treasury securities today -- scheduled for yesterday but postponed last week. But the government has now run out of options in avoiding the debt ceiling, Secretary John W. Snow said in a letter to the Senate.
With the newfound $20 billion, Treasury has engaged in a series of maneuvers involving various government trust funds and accounts -- and drawn down its usual cash cushion -- and cleared a cumulative $135 billion worth of borrowing authority, officials said. "We had hoped we would not have to go [so far]," Brian Roseboro, assistant Treasury secretary for financial markets, said in an interview. "We have had to disrupt the Treasury bill market, which we do not like to do. We were able to justify [the last $20 billion], but we are at the end. We have exhausted every prudent and legal fiscal management thing we can use," Roseboro said.
Even the added $20 billion worth of authority will last only until the middle of next week, he said. "Now the ball is in Congress's court," he added.
A number of analysts and bond market traders voiced annoyance at the delay in the usual sale of Treasury bills, which disrupted the normal flow of securities into the market. In his letter to the Senate, Snow said, "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." Among the payments that would be jeopardized, he said, are $21 billion in individual and business tax refunds, $5 billion to active and retired military personnel, $12 billion to defense suppliers and more than $40 billion in Social Security and Medicare benefits.
Congress nearly always balks at raising the ceiling because increased debt reflects lawmakers' failure to balance the government's books. This year the vote is especially painful for several reasons.
One is that the proposal to increase the current $6.4 trillion debt by another $984 billion would be the largest one-time increase in history, coming only a few years after budget surpluses led Bush administration officials to forecast an end to the national debt.
Another is timing. The House and the Senate are entering the final stretch toward passage of the third-largest tax cut in history, and the Congressional Budget Office recently raised its deficit forecast for 2003 to more than $300 billion, a record, without counting the cost of the new tax bill or supplemental spending for the war in Iraq and homeland security. Democrats have not been shy about linking tax cuts and debt.
Republican leaders face a third challenge: as many as a dozen Democratic amendments, including one to cut the size of the debt-ceiling increase by more than half, which would force several more debt-ceiling votes before next year's elections. The House passed its version of the bill as part of its budget resolution, freeing it from any direct votes on the debt issue. But any change by the Senate would send the bill back to the House, putting Republicans on the spot. Last year a smaller debt limit increase passed the House by only one vote.
The outcome could be especially important to Senate Majority Leader Bill Frist (R-Tenn.), who is trying to repair strained relations with House Republican leaders after a dust-up in which they faulted him for agreeing to a tax-cut deal among Senate Republicans without telling them about it. Failure to hold the line against Democratic amendments on the debt bill would almost certainly reopen the wounds.
If a conference is required, Roseboro said Congress would have to remain in session to pass the debt limit increase rather than depart for a week-long Memorial Day recess.
"The Congess just has to have a fire drill. They just have to do it at the end of the week," Roseboro said.
According to yesterday's announcement, today Treasury will sell $16 billion each in three- and six-month bills, followed Wednesday by $22 billion in four-week bills. In addition, tomorrow Treasury will sell $4 billion in a cash-management bill that will mature next Tuesday.
The four auctions totaling $58 billion will allow Treasury to repay holders of $44.3 billion worth of maturing securities and raise approximately $9.7 billion in new cash. That will use up about half of the additional $20 billion in borrowing authority mentioned by Roseboro.
If Senate action on the debt ceiling does not occur by Thursday morning, Treasury will have to postpone an announcement scheduled for that day regarding an auction of two-year notes to be held May 28, he said. Similarly, announcement of next week's regular bill auctions would have to be postponed as well. Next week's bill auctions would normally be held Tuesday rather than Monday because of the Memorial Day holiday.
© 2003 The Washington Post Company
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