Democratic Underground - U.S. Taps Exchange, Pension Funds as Debt Limit Looms

http://www.bloomberg.com/apps/news?pid=10000103&sid=amz.HoNLRL_0&refer=us

March 6 (Bloomberg) -- The U.S. Treasury today took steps to avoid slamming into the government's legal borrowing limit and to make sure the sale of a 10-year note goes ahead this week.

Treasury Secretary John Snow authorized the government to use the $15 billion available in the exchange stabilization fund on March 3 and issued a ``debt issuance suspension period'' to temporarily stop investments in the Civil Service Retirement and Disability Fund. The Treasury also redeemed some of the fund's current investments.

Today's actions by the Treasury provide ``only a few days of additional borrowing capacity, which we expect will be exhausted by mid-March,'' Snow said in a letter to House Speaker Dennis Hastert. ``Treasury has now taken all prudent and legal actions to avoid reaching the statutory debt limit.''

The moves were the second Treasury has taken in the last month to stay below the debt ceiling. They will ensure the Treasury can auction and settle the 10-year-notes scheduled to be sold this week and allow government operations to continue through mid-March. The Treasury said today it will auction $8 billion in 9 year-11 month 4 1/2 percent notes on March 9, and $18 billion in four-week bills at tomorrow's sale of the securities.

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This is the fourth time the administration of President George W. Bush has asked lawmakers to raise the debt limit. Congress complied with the last request, in November 2004, only after the Treasury was forced to delay auctioning bills and notes and move money among government pension funds.

Since Bush took office in 2001, the federal budget has gone from four years of surpluses, the longest such run since before the Great Depression, (here are the excuses for the complete mismanagement of our country) to deficits brought on by a recession, tax cuts, the Sept. 11 attacks, wars in Afghanistan and Iraq and Gulf Coast hurricane damage.

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