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Treasury details its steps to avoid debt limit

WASHINGTON -- Treasury Secretary John Snow told Congress yesterday that the administration has taken ''all prudent and legal actions," including tapping certain government retirement funds, to keep from reaching the $8.2 trillion national debt limit.

In a letter to Congress, Snow urged the lawmakers to pass a new debt ceiling immediately to avoid the first government default on its obligations in US history.

''I know that you share the president's and my commitment to maintaining the full faith and credit of the US government," Snow said in his letter to leaders in the House and Senate. His ''full faith and credit" comment referred to the Fourth Amendment.

Treasury officials, while briefing congressional aides last week, said that the government would run out of maneuvering room to keep from exceeding the limit in the week of March 20.

Snow, in his letter, notified lawmakers that the Treasury Department would begin tapping the Civil Service Retirement and Disability Fund, which Treasury Department officials said would provide a ''few billion" dollars in extra borrowing ability.

Treasury Department officials also announced that on Friday they had used the $15 billion in the Exchange Stabilization Fund, a reserve controlled by the Treasury secretary, which is normally used to smooth volatile movements in the value of the dollar in the world's currency markets.

The Treasury Department 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, investments taken out of the pension funds would be replaced and 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.

A default on the debt, a situation when the government misses making payments to bondholders, is considered highly unlikely given what it would do to the government's credit rating. It is expected that Congress will approve an increase in the $8.18 trillion debt limit by perhaps $781 billion.

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