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UPDATE 2-U.S. pushes debt limit strike date back 10 days
March 1, 2011 / 9:24 PM / in 7 years

UPDATE 2-U.S. pushes debt limit strike date back 10 days

(Adds Senate blocking Republican debt limit contingency)

WASHINGTON, March 1 (Reuters) - The U.S. Treasury Department on Tuesday pushed back the earliest estimated date that it anticipates reaching a legally set ceiling on its ability to borrow, by 10 days, to April 15.

Previously, the department had warned it could hit the $14.294 trillion statutory debt limit between April 5 and May 31. But it now says that will happen sometime between April 15 and May 31.

The Treasury Department said last month, when it announced its quarterly borrowing needs, that it would update at the start of each month when it expected to hit the debt ceiling.

The precise date that could happen varies, depending upon a number of factors, including how the economy is performing and the volumes of tax revenues flowing to the Treasury’s coffers.

Corporations and some individuals make quarterly estimated tax payments. The deadline for filing individual income tax returns for 2010 falls on April 18.

Treasury Secretary Timothy Geithner has been pressing Congress to raise the debt limit so the government can continue borrowing. But Republicans want to tie any increase to a firm commitment to spending cuts.

The Senate on Tuesday, in a party-line vote, blocked Republican legislation that would have prioritized Treasury Department actions in case borrowing authority is exhausted.

The measure would have required that government revenues be used for two things if the statutory debt ceiling is reached without congressional action to raise it: to make interest payments on U.S. government debt and to fund Social Security retirement benefit checks. Most other government programs would go unfunded under the plan.

Opponents said it was a bad idea that would create “economic chaos.”

Geithner said delay in raising the debt ceiling, which could potentially trigger the first default on U.S. debt in the country’s history, would have “catastrophic” consequences for the economy.

On Tuesday, Federal Reserve Chairman Ben Bernanke added his call for lawmakers to avert a crisis related to the debt ceiling.

Bernanke, who testifies for a second day before a House of Representatives committee on Wednesday, reiterated a warning that a failure by Congress to raise the U.S. government’s debt ceiling could lead to a debt default that would have dire consequences for the economy.

“It would be extremely dangerous and very likely a recovery-ending event,” he said. (Reporting by Glenn Somerville; Additional reporting by Richard Cowan; Editing by Dan Grebler)

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