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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-WTO Row

REUTERS SHOWCASE

Market Eye

Market Eye

Nifty falls most in nearly 3-1/2 weeks; Sensex down over 400 points  Full Article 

Factory Activity

Factory Activity

Factories post fastest growth for 17 months in July  Full Article 

Paying for Bail

Paying for Bail

Jailed Subrata Roy gets office to negotiate hotel sales.  Full Article 

Rupee Dips

Rupee Dips

Rupee posts biggest weekly loss since record lows in August.  Full Article 

Reviving Infosys

Reviving Infosys

CEO Sikka says to improve business with new growth avenues  Full Article 

Outlook Slashed

Outlook Slashed

ArcelorMittal cuts outlook as ore prices hit mining  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China, Asian factory growth gathers pace; Europe falters  Full Article 

Factory Lockout

Factory Lockout

Pfizer says threats to managers force staff lockout at Mumbai factory .  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Reuters India Mobile

Reuters India Mobile

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