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Debt ceiling fight cost U.S. Treasury $1.3 billion: GAO
WASHINGTON |
WASHINGTON (Reuters) - The bitter partisan fight over raising the U.S. debt ceiling last year pushed up the U.S. Treasury's borrowing costs by $1.3 billion, congressional auditors said on Monday, giving Democrats ammunition to paint Republicans as fiscally irresponsible.
Delays in raising the debt limit created uncertainty in the Treasury market and led to higher borrowing costs, according to a report from the Government Accountability Office (GAO), an investigative arm of Congress.
In addition to the $1.3 trillion in higher interest rates for fiscal 2011, GAO said multi-year Treasury securities issued last year also will continue to accrue higher interest costs for years to come.
Some Republican lawmakers had refused to raise the debt ceiling -- the legal amount the U.S. Treasury is allowed to borrow -- without concessions from Democrats to reduce massive budget deficits, which have exceeded $1 trillion since President Barack Obama took office.
The fight eventually brought the U.S. government to the brink of a debt default and cost the United States its top-tier, triple-A credit rating from Standard and Poor's.
Treasury Secretary Timothy Geithner, who was forced to dip into government pension funds and move cash around in order to avoid hitting the debt limit, is warning Republicans against a repeat of last summer's theatrics.
But the most powerful Republican in Congress, House Speaker John Boehner, has already said he will not raise the debt ceiling without more spending cuts.
"The cost of last summer's recklessness by Republicans only continues to grow, yet they seem eager to do it all over again," said Sander Levin, the top Democrat on the House of Representatives' tax-writing committee.
As a result of last year's compromise to raise the debt ceiling, lawmakers and the White House agreed to a cap on discretionary spending and to $1.2 trillion in across-the-board government cuts over the next decade.
The cuts are set to start taking effect when tax breaks for all Americans expire at the end of the year, which is forcing lawmakers and the Obama administration into another high-stakes battle over government spending and taxes.
The U.S. Treasury is on track to hit the $16.4 trillion debt ceiling before the end of the year, though emergency tools will allow the department to push the deadline into 2013.
Michael Steel, a spokesman for Boehner, said on Monday that the deficit reduction plan that accompanied last year's debt limit hike will save taxpayers $2.1 trillion.
"The problem is the unsustainable deficits and debt, not our efforts to force Washington Democrats to deal with them. Denial is not an effective strategy for dealing with the serious problems facing America," Steel added.
A Treasury spokesman declined comment.
(Reporting By Rachelle Younglai and David Lawder; Editing by Cynthia Osterman)
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Those efforts saved big employers, gave $288 Billion in tax relief or incentives, funded over $40 Billion in transportation projects (‘shovel-ready’ road repairs got done all over the USA), and more, with positive effects tapering off into 2014. We hear about the $8 billion total in ARRA for renewable energy since a few firms went bust, but not the $4 billion plus in ARRA for coal oil and gas R&D, or the local/state fiscal relief, or funds for science, local law enforcement, etc.
Much of the TARP money has already been paid back, too, in effect lowering the cost below the total above to perhaps well under $1 Trillion.
The Bush & Obama rescue efforts in 2008-2009 cost about the same as the cost of the posturing by the Norquist wing of the GOP, who turned down a deal with over $3 Trillion in spending deal at the last ‘play chicken at the fiscal cliff’ debt ceiling, because they couldn’t accept $800 Billion in revenue (taxes).
CBO now says that epic uncertainty, combined with the USA credit down-rating to drive up borrowing costs, cost us $1.3 Trillion. What did we get for the GOP’s $1.3 Trillion at the last fiscal cliff? NOTHING! It was money flushed down the Tea Party toilet by the GOP, who paint themselves as the guardians of fiscal responsibility.
For 3 years since 2008 elections, we heard how businesses feared ‘uncertainty’ — and now we see the cost of the no-tax GOP delivering uncertainty big-time, instead of a budget compromise -– it cost about 10% of our total debt, flushed down the toilet with the interest left for our kids.
This comparison should be an election message.
How many steps away from treason are all the Norquist pledge-signers in office? What else would you call lame-brained acts of political posturing that cost America $1.3 Trillion — to get absolutely nothing?
Check the Facts- the continued 2004 tax cuts account for almost half of current annual deficits. That’s why it’s time to start phasing them out from the top down.
Still – the posturing got us nothing, a Billion wasted. I hope the house accepts a deal that comes close to what was offered at the last debt ceiling instead of more grand standing and maybe another credit downgrade.
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