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By JEANNINE AVERSA, Associated Press Writer
WASHINGTON - Treasury Secretary John Snow announced Thursday that the government has begun using various accounting procedures to avoid hitting the $7.4 trillion national debt limit.
Snow made the announcement in a letter to Congress, which has not passed legislation needed to boost the government's borrowing authority, which now stands at a statutory limit of $7.4 trillion.
"Given current projections, it is imperative that the Congress take action to increase the debt limit by mid-November," when "all of our previously used prudent and legal actions to avoid breaching the statutory debt limit will be exhausted," Snow wrote in the letter to House and Senate leaders of both parties.
Democrats used Snow's announcement to attack the Bush administration's record budget deficits, which will force Congress to increase the debt ceiling for the third time in three years.
"Though the administration tries to diminish the gravity of the problem, there is no way to dismiss debt ceiling increases at historic highs. This is the burden Republican policies are passing onto next generations, and there is no plan or prospect for confronting it," said Rep. John Spratt (news, bio, voting record) of South Carolina, the top Democrat on the House Budget Committee.
Congress is expected to come back in a special session after the Nov. 2 elections to deal with the debt limit and pass a massive spending bill to keep the government running.
Republican leaders did not want to take up the debt issue before the election and open themselves up to Democratic attacks about the record federal budget deficits run up during President Bush (news - web sites)'s first term in office.
The government recorded a $374 billion budget deficit last year — a record in dollar terms — and projections call for this year's to be even larger, more than $400 billion, which would set a new record.
Snow said in his letter he would begin halting new investments in a retirement fund for federal workers as a way to stay under the debt limit. Snow said the maneuvers would have no lasting impact on the fund because the government would make up the lost investments and any lost interest payments once the government's borrowing authority has been boosted.
Snow also noted that the same maneuver had been used by his predecessors.
Sen. John Kerry (news - web sites), the Democratic presidential challenger, has attacked Bush for taking the government from surpluses to record deficits, a switch that Kerry blames on large tax cuts Kerry contends favor the wealthy.
Bush, however, counters that the tax cuts helped to lift the economy out of the 2001 recession and that the budget deficits were caused by the need to beef up spending to fight two wars and protect the homeland against terrorist threats.
A Treasury Department (news - web sites) spokeswoman said the battle over the debt limit was not expected to affect the Treasury's announcement of when it will hold its next quarterly auctions of government securities.
Alj story
US President George Bush's administration has weathered a pre-election mauling by announcing emergency measures to skirt a $7.38-trillion debt limit.
Treasury Secretary John Snow said he would use pension money to keep the government running.
In a letter to US Senate majority leader Bill Frist on Thursday, Snow said he was immediately suspending payments to a federal employees' retirement scheme, the Government Securities Investment Fund (G-Fund).
The missing money would be repaid in full later, with no net effect on the fund or retirees, he promised.
The treasury secretary said he was forced to take the emergency accounting step because congress had not acted on his 2 August request for the government's legal debt limit to be raised.
Any move by congress to raise the debt limit could be politically embarrassing.
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