The Treasury is taking steps to avoid breaching the debt ceiling, currently set at $15.194 trillion. President Obama told Congress on Jan. 12 that his administration was nearing its borrowing limit, forcing the Treasury to rein in spending.
Congress will have until Jan. 27 to approve the president’s request. However, the Republican-controlled House of Representatives is expected to reject any further increase in the debt limit this week, although the House vote will be nothing more than a symbolic move. Indeed, the Senate is expected to kill the resolution when it returns from recess next week. In any case, President Obama now has the authority to veto any decision taken by Congress following the approval of the Budget Control Act on Aug. 1 last year. The president’s veto would be unlikely to be overridden since it would take a two-thirds vote in each chamber to do so. However, the House vote will allow the Republicans to express their disapproval at yet another increase in the debt ceiling.
“As a result of the debt limit certification submitted to Congress by the president on Jan. 12, 2012, unless a joint resolution of disapproval is enacted, the debt limit will be increased…effective after the close of business on Jan. 27,” Treasury Secretary Timothy Geithner wrote in a letter addressed to lawmakers, including Senate Majority Leader Harry Reid (D., Nev.) and House Speaker John Boehner (R., Ohio).
In the meantime, the Treasury will adopt measures to reduce cash outflow, including payments into the Government Securities Investment Fund, or G Fund, the retirement scheme for federal workers.
Once the government’s borrowing limit has been raised by a further $1.2 trillion, a further increase is unlikely to be necessary until after the presidential election, which is scheduled to take place on Nov. 6.
Mr. Boehner attacked the president’s latest move, calling it a sign of “leadership failure”. “The vote itself is an indictment of the administration’s reckless spending binge that has driven America’s economy down a disastrous fiscal path and hurt job creation at a critical time for middle-class families and small businesses,” he told the House.
