Obama to Ask for $1.2 Trillion Increase in Debt Limit

Correction Appended

WASHINGTON -- President Obama will ask Congress this week for $1.2 trillion in additional borrowing authority, which would raise the federal debt limit to $16.4 trillion and avoid the need for further increases before the 2012 elections, administration officials said Tuesday.

This would be the final increase allowed under the budget agreement reached in August after the government came close to default. Since signing legislation to codify that agreement on Aug. 2, Mr. Obama has obtained two increases totaling $900 billion.

The budget agreement largely pre-empts the partisan debate over federal deficits and debt that the request might otherwise have touched off in Congress.

While the House, controlled by Republicans, could try to block the proposed increase in the debt limit, the Senate, with a Democratic majority, is unlikely to go along. If both houses of Congress voted to block the increase, Mr. Obama could veto the legislation.

The government's need for more borrowing results from the fact that it spends far more than it raises in revenue; it makes up the difference by borrowing 36 cents of every dollar it spends. In the fiscal year that ended Sept. 30, the government spent $3.6 trillion and collected $2.3 trillion.

Despite record debt, the Treasury still finds that it can borrow at extraordinarily low interest rates, contrary to predictions by some Republican lawmakers, who had warned that soaring deficits would require the government to pay more to lenders and investors in Treasury debt.

In the last decade, the government has borrowed record sums to pay for the wars in Iraq and Afghanistan, tax cuts adopted under President George W. Bush and economic stimulus measures enacted in 2009 to address the worst economic slump since the 1930s.

Since President Obama took office, the debt has shot up 42 percent, to the current level of $15.1 trillion. Of that amount, $10.4 trillion is borrowed from the public, and $4.7 trillion consists of special-issue Treasury securities held by Social Security and other government trust funds. Debt held by the public, considered by many economists to be the more significant indicator, is 65 percent higher now than in January 2009.

Treasury officials said the debt often increased at the end of the year because of large interest payments that the government makes to Social Security and other trust funds. These payments will total $82 billion this month, the Treasury said. Money not immediately needed by the trust funds is invested in the special Treasury securities.

In September, the House voted to block Mr. Obama's request to raise the debt limit by $500 billion, the second increase. However, the Senate had already turned back a similar move.

Representative Tom Reed, a Republican from upstate New York, who led the House effort, said, "Dealing with this national debt is one of the primary reasons why I ran for Congress -- to stop the endless borrowing of Washington, D.C., on the backs of our children and our grandchildren." He said the debt was a "threat to national security."

Four House Democrats have introduced a bill to eliminate the statutory cap on the public debt. "There's no reason to have a debt ceiling at all," said one of the four, Representative Hank Johnson of Georgia. "It doesn't restrain spending, since the spending has already been committed. It just threatens our credit, and it weakens our country."

If the government got close to the debt limit again before the elections in November, a Treasury official said, "we would be able to invoke extraordinary measures to extend borrowing authority beyond the elections."

To avoid defaulting, the Treasury has sometimes delayed issuing certain types of debt held by federal trust funds and by state and local governments.

Under the new budget law, Mr. Obama could have requested a larger increase in the debt limit if Congress had agreed on a constitutional amendment to require balanced budgets or if deficit-reducing recommendations from a joint committee had become law. The amendment was not approved, and the committee could not agree on any proposals.

Correction: December 27, 2011, Tuesday

This article has been revised to reflect the following correction: A Web site summary with an earlier version of this article incorrectly listed the amount of the debt limit increase sought by President Obama. It is $1.2 trillion, not $1.2 million.

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This article originally appeared in The New York Times.

First published on December 28, 2011 at 12:00 am

Source: http://www.post-gazette.com/pg/11362/1199700-84-0.stm?cmpid=nationworld.xml

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