* U.S. Treasury's advisers say fiscal cliff hurting economy
* U.S. still plans to issue floating-rate notes next year
* Treasury says "important" to raise debt limit in timely
By Rachelle Younglai
WASHINGTON, Oct 31 The Obama administration said
on Wednesday that the nation would hit the legal limit on its
debt near the year's end, although it can tap emergency measures
to stave off a default and keep the government running into
As of Monday, the U.S. Treasury was $235 billion below the
$16.4 trillion statutory ceiling on the amount it can borrow.
That gives the government enough funds to pay its bills,
including interest on its debt and retirement health benefits,
until the end of the year, the Treasury said, reiterating a
forecast it made in August.
If Congress fails to raise the debt limit, analysts expect
the Treasury will run out of options to avoid a default some
time in the latter half of February. However, the forecast could
change dramatically depending on how the administration and
Congress deal with the massive tax increases and spending cuts
due to go into effect at year-end.
After Tuesday's presidential and congressional elections,
Washington will have less than two months to find a solution to
the so-called fiscal cliff - the $600 billion in tax increases
and budget cuts that could fuel a fresh recession.
Treasury officials, briefing reporters on debt sale plans,
said it was urgent that Congress act to increase the nation's
"As we saw last summer, it is important that the debt limit
is raised in a timely manner," said Treasury Assistant Secretary
A political fight last summer over raising the debt ceiling
pushed the United States to the brink of default and prompted
Standard and Poor's to downgrade the country's top-tier credit
rating. A congressional watchdog agency said the battle also
drove up Treasury's borrowing costs.
"FISCAL CLIFF" CONCERNS WEIGH ON ECONOMY
Deep divisions between Democrats and Republicans over taxes
and government spending once again carry the potential for a
costly policy clash over budget policy.
A group of Wall Street firms that advises the Treasury on
borrowing needs warned that the prospect the nation could run
into the fiscal cliff was already weighing on the U.S. recovery.
Business investment slumped in the third quarter, taking a bite
of economic growth.
"A timely and orderly resolution of this uncertainty would
contribute meaningfully to an improvement in the economic
outlook," the firms said in a report to Treasury Secretary
The Treasury announced plans to auction a total of $72
billion in 3-, 10- and 30-year debt securities next week to
refund maturing debt and raise $8.9 billion in new cash. The
department expects to keep its debt sales stable in coming
Earlier this week, the Treasury cut its borrowing estimates
for the final quarter of the year due to higher-than-expected
revenues and less government spending.
The Treasury said it still had not made a decision on
whether to allow investors to bid on securities that offer
negative interest rates.
It said it still planned on issuing floating-rate notes late
next year and Rutherford dismissed suggestions that
investigations into key British benchmark interest rate Libor
was complicating that plan.
He said the Treasury would be asking market participants to
weigh in on the best design features for the floating-rate note,
including the reference index.
The status of Libor, or the London Interbank Offered Rate,
is in flux as British authorities grapple with how to improve
the rate-setting process after Barclays Plc admitted it rigged
the rate for its own benefit.