Rubin Details Measures to Postpone Debt Crisis

Treasury Secretary Robert E. Rubin announced a new set of measures Monday to postpone the federal debt crisis until the end of February, but he said that the government then would no longer be able to meet its obligations if Congress does not increase its borrowing authority.

Rubin issued his warning in a letter to House Speaker Newt Gingrich (R-Ga.). Gingrich earlier had told reporters that Republicans could not “in good conscience” vote for an increase in borrowing authority without assurances that President Clinton is willing to take steps to limit the growth of the national debt.

“It’s a two-way street here,” Gingrich said. “What substantial [budget] reform is he prepared to sign?”

The latest exchange in the budget battle came as talks between the White House and congressional Republicans over a formula for balancing the books in seven years remained deadlocked. It reflected a switch in GOP tactics.

Republicans have twice allowed substantial parts of the government shut down temporarily for want of spending authority in the hopes that Clinton would agree to spending cuts as the price for reopening all the government.

Many agencies will run out of spending authority after Friday, but Gingrich said GOP leaders are preparing to pass by Thursday another short-term spending bill to keep the government operating until March 1. He said the measure will call for abolition of a dozen or more programs that “we know we have broad agreement to zero out.”

Gingrich said that Republicans want the program terminations to be a “down payment” on balancing the budget by 2002.

The Republican focus has turned from government spending authority to borrowing authority as Rubin began to warn of a borrowing crunch in mid-February.

Republican leaders said that they could not take Rubin’s latest threats seriously because they resembled his warnings of November, when he said that the government might default on its obligations if Congress did not increase borrowing authority. Congress did not act, but Rubin was able to postpone the crisis.

“He was saying Nov. 15 was a problem,” said Rep. John A. Boehner (R-Ohio). “How many times is he going to cry wolf?”

However, some House Republicans were expressing growing reservations about the wisdom of engaging in budgetary brinkmanship. Some fear a public relations drubbing of the sort Republicans suffered when they tried to use the partial shutdown to win concessions from Clinton.

“We are playing with fire here,” said Rep. Marge Roukema (R-N.J.), who is circulating a letter to Gingrich urging passage of a debt-limit increase with no strings attached. “We are growing increasingly concerned about what we consider to be reckless talk, which may presage even more reckless action on the debt ceiling.”

Roukema helped lead a charge among Republicans to pressure their leadership into ending the government shutdown earlier this year.

Congress in November passed a bill to raise the $4.9-trillion debt limit, but Clinton vetoed it because it also would have limited the Treasury Department’s ability to use certain accounting maneuvers to avoid default.

Since that veto, Rubin has been using those very accounting maneuvers to keep from breaching the debt ceiling.

“I have now concluded that either Feb. 29 or March 1 is the date on which Treasury will no longer be able to fulfill all of its financial obligations without legislation increasing the statutory debt limit,” Rubin said.

He said that $5.8 billion in interest payments are due Feb. 29 and more than $30 billion in benefit payments are due March 1, including a wide range of retirement benefits to Social Security recipients, veterans and civil servants. Other payments are due that day to Medicare recipients and active-duty military personnel.

To gain another two weeks beyond Feb. 15 without violating the borrowing limit, Rubin said in his letter to Gingrich that he would:

* Tap $3.9 billion in the Exchange Stabilization Fund, which dates to the 1930s and is used to stabilize currencies in international markets. The fund would be left with $17 billion for emergency intervention in currency markets.

* Permit the Federal Financing Bank, which lends money to quasi-governmental agencies, to exchange about $9 billion in notes it holds in its portfolio for an equal amount of Treasury securities held by certain government trust funds. The securities would be transferred to the trust funds, which would then free up an additional $9 billion for borrowing.

* Extend by two months, to a maximum period of 14 months, his debt-issuance suspension, allowing the redemption of $6.4 billion in additional Treasury debt held by the Civil Service Retirement and Disability Fund.