WASHINGTON May 15 The U.S. Treasury on
Wednesday announced the first of a potential series of emergency
cash measures to allow the government to keep paying the
nation's bills once a temporary suspension of the debt ceiling
lapses this weekend.
To avoid running out of room to borrow, the Treasury
Department said it will suspend issuance of state and local
government series securities, known as "slugs", beginning on
Friday at noon.
Slugs are low-interest Treasury securities offered to state
and local governments to invest proceeds from municipal bond
sales. They have been suspended eight times over the last 20
years to avoid hitting the debt ceiling, most recently last
Emergency cash maneuvers buy more time for the
administration and Congress to negotiate an increase in the
legal limit on the nation's debt. Ultimately, an impasse could
lead to a debt default that would shake global financial
Republicans in Congress want to use the need to raise the
borrowing cap as leverage to seek fresh budget cuts and change
the tax code. But President Barack Obama said any deal to cut
the budget deficit would need to include additional taxes, an
idea that is anathema to many conservatives.
Normally, emergency cash measures would buy the Treasury
about two months before it would run out of cash to pay all of
its bills. But unexpectedly strong tax receipts and sizable
bailout payments from mortgage finance firms Fannie Mae
and Freddie Mac should give Treasury more
U.S. Treasury Jack Lew had said the government would be able
to pay its bills at least into early September.
Many private forecasters believe the drop-dead date will not
be reached until October, and the non-partisan Congressional
Budget Office estimates it could be as late as November.
In 2011, the Obama administration and Congress battled for
months before raising the debt ceiling to $16.4 trillion. The
fight hurt consumer confidence and shook financial markets.
Earlier this year, Congress decided to side step a messy
political fight and put in place legislation that suspended the
legal debt limit. When that suspension expires on Sunday, the
new ceiling will be set at the existing level of the nation's
debt. As of Tuesday, the public debt subject to a limit stood at