U.S. nearly out of money to run the government

August 3, 2004
BY JEANNINE AVERSA
ASSOCIATED PRESS

WASHINGTON -- The United States could face the prospect of not being able to pay its bills this fall unless Congress raises government borrowing authority now capped at $7.4 trillion, Treasury Secretary John Snow said Monday.

Snow said the government is expected to reach the ceiling on the national debt by late September or early October.

Even if the Treasury takes steps to juggle accounts to stay just under the limit, as it has in the past, "we can finance government operations no longer than mid- to late November," Snow wrote.

He urged Congress to raise the debt limit as soon as possible. He did not suggest a specific amount.

Boosting the limit is more a matter of politics than economics. Economists doubt that Congress will reject Snow's call. A federal default is considered unimaginable because it would rattle bond markets and force interest rates higher.

Democrats cite the government's need to boost the limit as evidence that President George W. Bush is mishandling the economy. The administration says fighting terrorism at home and abroad is among the reasons government borrowing has gone up.

The Treasury needs to borrow to finance the government's daily operations, which include meeting interest payments on the national debt, which stands at nearly $7.3 trillion.

For the October-to-December quarter, the Treasury estimated it would need to borrow $122 billion, which would mark a record for that quarter.

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