U.S. Treasury says hitting debt ceiling on Monday

WASHINGTON Tue Jan 1, 2013 4:19am IST

A bank employee counts U.S. hundred dollar bills at Kasikornbank in Bangkok in this January 21, 2010 file photo. REUTERS/Sukree Sukplang/Files

A bank employee counts U.S. hundred dollar bills at Kasikornbank in Bangkok in this January 21, 2010 file photo.

Credit: Reuters/Sukree Sukplang/Files

Related Topics

WASHINGTON (Reuters) - The U.S. Treasury said it would hit a legal limit on borrowing on Monday but was launching new measures to keep the nation from defaulting on its debt.

A Treasury official said the federal government was hitting its $16.4 trillion ceiling on borrowing.

The government is facing a crunch on the debt ceiling because the issue has become tangled up in talks to avoid some $600 billion in tax hikes and spending cuts due to begin in early January. Failing to raise the debt ceiling could cause the government to default on its debt.

To cut government spending and keep the government from going over the debt ceiling, the government will suspend some investments in pension and health benefit funds for federal workers beginning on Monday, Treasury Secretary Timothy Geithner said in a letter to congressional leaders.

The suspension of the investments is part of a series of measures announced last week to keep the country from defaulting on its debt.

Normally, these measures would buy the Treasury about two months before hitting the debt ceiling, the Treasury has said. But a series of planned tax hikes and spending cuts due to take effect in early January could give Treasury further time if they take effect as scheduled, Geithner said last week.

Many analysts believe the measures available to the Treasury can stave that date off into late February.

The U.S. Congress typically authorizes government borrowing in a two-stage process, first drafting plans to spend more than it raises in tax revenues. Every few years, it raises a limit on government borrowing to accommodate annual deficits, a process that this year has become ensnared by the contentious budget talks in Washington.

(Reporting by Jason Lange; Editing by Will Dunham and Cynthia Osterman)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

EARNINGS

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Facebook Results

Facebook Results

Facebook tops Wall Street revenue target in 4th quarter.  Full Article 

Tackling Deficit

Tackling Deficit

Government makes push to boost revenue as deficit deadline nears.  Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage