Administration Asks Congress to Raise Debt Ceiling to $2.078 Trillion by Oct. 15
The Reagan Administration on Tuesday asked that Congress raise the national debt limit above $2 trillion, saying that, without new borrowing authority, the Treasury would be broke by Oct. 15.
John J. Niehenke, acting assistant Treasury secretary for domestic finance, told the Senate Finance subcommittee on taxation and debt management that the debt limit change was “merely a recognition” of obligations already made by the government. He asked that the Senate approve, without amendment, the $2.078-trillion debt ceiling that the House had approved when it adopted the fiscal 1986 budget on Aug. 1.
But members of the panel made it clear that the Senate would not approve additional debt without strings attached.
White House spokesman Larry Speakes said that the Administration has contingency plans to shut down government agencies and “would be prepared to do so if there was not congressional action to raise the debt ceiling.”
Sen. Steven D. Symms (R-Ida.) said that he would consider leaving the debt limit where it is, “have the attorney general rule that (the President) can’t spend any money that he doesn’t have and Congress could go home.”
But he said that Congress might more realistically impose new spending restraints and a smaller debt increase.
Reserves to Dwindle
Niehenke said that the Treasury will reach the current debt limit of $1.824 trillion on Sept. 30 and that its cash reserve of about $20 billion will then dwindle quickly. By Oct. 15, he said, the coffers will be empty unless Congress acts.
The Administration estimates that a debt ceiling of $2.073 trillion will be needed to meet government obligations in the fiscal year beginning Oct. 1., about $5 billion less than the new limit approved by the House. Niehenke said that the Administration is supporting the House figure because the House would have to consider the matter again if the Senate makes changes.
Niehenke said that the Administration wants the debt ceiling increased by the end of September to facilitate the orderly transaction of Treasury business, including the issuing of bonds.
Senate Finance Committee Chairman Bob Packwood (R-Ore.) said that the increase in the debt ceiling is essential to pay for programs already approved.
“We’re going to spend more than we’re going to tax,” he said. “The only way to make it up is to borrow.”
But Packwood said that there probably will be numerous amendments to the measure as senators try to attach pet bills.
Niehenke told the subcommittee that more than $170 billion a year--more than half of what the Treasury collects in income taxes from individuals--is paid to service the debt.
In addition to further spending cuts, the Senate could approve amendments on almost any issue, whether or not it is related to the debt ceiling. One frequently mentioned amendment would give President Reagan authority to veto individual items in spending bills--a measure that failed earlier this year as a separate bill.
Packwood said that he would try to keep the debt limit from becoming a catchall bill.
But, he said: “I’m not so naive to think this is going to make it to the floor and whisk on through.”