By Denny Gulino
WASHINGTON (MNI) – As the House of Representatives prepares its
objection — already made irrelevant by the prospective approval of the
Senate — the Treasury Department Tuesday advanced another step toward
an additional $1.2 trillion in borrowing power, using money otherwise to
be invested in a government employees’ retirement fund.
In a letter to every member of Congress, Treasury Secretary Timothy
Geithner delivered a short but required notification that cash is now
being diverted from investment in the government employee’s retirement
“G Fund” to help pay for government operations.
Like the use of the Treasury’s Exchange Stabilization Fund underway
for weeks, the Treasury’s use of “G Fund” money postpones any breach of
the $15.194 trillion statutory debt limit.
The letter said that come Jan. 27, the $1.2 trillion in additional
borrowing power will kick in, barring a congressional joint resolution
of disapproval. Since the Senate is still controlled by Democrats, the
“joint” disapproval is impossible, despite the vote by the House due
Wednesday.
The arrangement was made in the Budget Control Act passed late last
year only after weeks of congressional paralysis triggered Standard and
Poor’s first downgrade of the U.S. sovereign debt rating.
A revisit of the paralysis is expected for early 2013 unless the
November elections place both Houses in control of the same political
party. It is then that more Treasury “extraordinary measures” will run
out and the debt limit will once again be reaching a “drop dead” date,
requiring some congressional action.
The Budget Control Act represented an agreement to put the battle
beyond Election Day.
** Market News International Washington Bureau: 202-371-2121 **
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