WASHINGTON Dec 31 The U.S. Treasury said it
would hit a legal limit on borrowing on Monday but was launching
new measures to keep the nation from defaulting on its debt.
A Treasury official said the federal government was hitting
its $16.4 trillion ceiling on borrowing.
The government is facing a crunch on the debt ceiling
because the issue has become tangled up in talks to avoid some
$600 billion in tax hikes and spending cuts due to begin in
early January. Failing to raise the debt ceiling could cause the
government to default on its debt.
To cut government spending and keep the government from
going over the debt ceiling, the government will suspend some
investments in pension and health benefit funds for federal
workers beginning on Monday, Treasury Secretary Timothy Geithner
said in a letter to congressional leaders.
The suspension of the investments is part of a series of
measures announced last week to keep the country from defaulting
on its debt.
Normally, these measures would buy the Treasury about two
months before hitting the debt ceiling, the Treasury has said.
But a series of planned tax hikes and spending cuts due to take
effect in early January could give Treasury further time if they
take effect as scheduled, Geithner said last week.
Many analysts believe the measures available to the Treasury
can stave that date off into late February.
The U.S. Congress typically authorizes government borrowing
in a two-stage process, first drafting plans to spend more than
it raises in tax revenues. Every few years, it raises a limit on
government borrowing to accommodate annual deficits, a process
that this year has become ensnared by the contentious budget
talks in Washington.