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

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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