US Treasury reluctant to pinpoint debt cap timing

Thu Jul 8, 2004
By Jonathan Nicholson

WASHINGTON, July 8 (Reuters) - With November's presidential election looming, U.S. Treasury officials are growing more reluctant to pinpoint exactly when the government's $7.384 trillion debt limit will need to be raised -- always a politically contentious issue.

"Late summer or early fall is when we will hit the ceiling," Don Hammond, Treasury's fiscal assistant secretary, told reporters after a Senate panel hearing on Thursday.

His words echoed those of Timothy Bitsberger, Treasury's nominee for assistant secretary for financial markets, who told a different Senate panel on Wednesday Congress would have to raise the ceiling by "late summer or early fall."

This was a shift from March, when Hammond told lawmakers the cap would be hit in the "August, September time frame." However, the government actually has a much better estimate of expected revenues now than it did then and the debt has crept even closer to the limit.

On Wednesday, the government's debt -- a combination of accumulated past annual budget shortfalls and debt held by government trust funds, such as for Social Security -- hit nearly $7.217 trillion.

The ceiling has been raised twice during the Bush administration and a defense spending bill passed by the U.S. House of Representatives in June would have boosted it again without an embarrassing separate vote on the debt cap itself. That move was torpedoed by the Senate, however.

Democrats welcome debate on the debt ceiling as a way to highlight what they say are failed Bush tax policies.

As Congress mulled the record $984 billion increase in the ceiling last year, Brian Roseboro, now Treasury's under secretary for domestic finance, said, "We'll still be dealing again before the election."

But with individual income tax revenues rising, recent Treasury pronouncements on timing have become more vague. In June, Roseboro said it was possible a hike could be put off until after November's election.

"It depends on when we hit it and the amount, but that is a possibility," he said.

Similarly, on Wednesday, Bitsberger declined to say whether the limit would be hit before the election.

There are accounting maneuvers Treasury can take -- and has taken in the past -- to keep itself just below the limit. How much time those would buy is uncertain.

"How long we can sustain after we've hit the ceiling depends on a whole number of factors which we're still looking at," Hammond said. (Additional reporting by Laura MacInnis)

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