President Signs Bill Raising Debt Ceiling : Economy: Government avoids a financial crisis. Treasury resumes auctions of securities put on hold.

President Bush today signed a bill raising the government’s borrowing limit to $3.1 trillion, averting a government financial crisis and allowing the Treasury to immediately resume borrowing to replenish its empty coffers.

Congress approved the legislation raising the national debt ceiling Tuesday night. The bill allows the government to avoid a default on paying its bills.

The Treasury Department, with the higher limit in place, reacted promptly after Bush signed the bill. An auction of $16 billion in three-month and six-month bills, originally scheduled for Monday but reset for later today, will permit the government to redeem the $13.8 billion in Treasury bills that mature on Thursday.

The bill’s passage also sets the stage for pressurized confrontations between the Democratic-controlled Congress and Bush on a range of issues, such as how to stem the tide of red ink that has led to the nation’s huge debt burden.

“It provides momentum,” said House Budget Committee Chairman Leon E. Panetta (D-Monterey). Lawmakers will focus on wrapping up some long-contentious issues because “there really is a chance to conclude the Congress before Thanksgiving,” he said.

The Senate, by voice vote, and then the House, by 269 to 99, sent the debt bill to Bush Tuesday night. The measure increases the borrowing limit by $300 billion to finance government operations well into 1991.

Despite such highly touted efforts as the Gramm-Rudman law, government spending continues to outpace revenue, recently at a rate of $150 billion a year.

As a result, the Treasury has been forced to borrow more and more money to finance government spending that exceeds tax receipts. The new statutory debt ceiling, an increase from the $2.8 trillion already borrowed, is more than three times what it was at the beginning of the 1980s.

The tripling of the national debt since the beginning of the decade is due to the huge budget deficits of the Reagan Administration.

The Treasury had said that unless allowed to issue new debt this week, the government would have been unable to pay its debts on Thursday. It would have been the first-ever default by the U.S. government, a calamity for the world financial markets and America’s prestige.

The debt bill was passed following days of complex negotiations between the two parties on Capitol Hill and the President’s representatives.

As a result of the talks, divisive issues such as Bush’s capital gains tax cut and a move to repeal the Medicare catastrophic illness law were kept off the debt bill rather than risk default.

Although the U.S. government has never defaulted on its debt, it came close on several occasions.

For example, it had to dip into Social Security funds to keep its line of credit open in 1985. And in 1983, a delay in increasing the debt limit forced the government to exhaust its line of credit, leading to a suspension of savings bond sales, restrictions on deposits to the Social Security funds and cancellation of scheduled securities auctions.