UPDATE 1-US Treasury able to buy more time if debt limit returns

Thu Jan 31, 2013 7:43pm EST

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WASHINGTON Jan 31 (Reuters) - The U.S. Treasury Department said it could redeploy emergency cash measures from May 19 if necessary to ensure the government could keep borrowing money, a Treasury official said on Thursday.

A bill allowing the U.S. government to borrow money beyond its record $16.4 trillion debt limit won final Congressional approval earlier on Thursday. The bill, which needs to be signed by President Barack Obama, suspends the debt limit until May 19.

The Treasury's so-called "extraordinary measures" would likely push into July the date before the government hits its legal borrowing limit as imposed by Congress.

Congress has wrangled over raising the debt ceiling in a showdown between Republicans, who demand more spending cuts to shrink deficits, and Democrats, who favor reducing deficits with a mix of spending cuts and tax hikes.

The U.S. first touched the debt limit on Dec. 31, and the Treasury Department began shuffling around funds to ensure the government could still make all its payments while Congress debated the debt limit.

These measures were set to expire between mid-February and early March.

Once Obama approves the legislation, the Treasury said it would start unwinding the cash measures it was using, including restoring money borrowed from various trust funds.

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