By Keith Koffler,CongressDaily
The federal government is just weeks away from reaching the statutory debt ceiling, raising the specter of a major pre-Election Day political showdown over whether to increase the borrowing limit so the government can continue to pay its bills.
The debate, if it occurs, could highlight the government's ongoing deficit spending at a time when the Democratic presidential nominee, Sen. John Kerry of Massachusetts, will be hammering President Bush over the growth in the federal deficit that has occurred under his watch.
But Republicans might be able to push the debate over into the post-election season if a lame duck session is scheduled.
A Treasury Department spokesman said Wednesday the Bush administration believes the existing debt limit of $7.384 trillion will be reached later this month or early in October, the same timeframe spelled out in an Aug. 2 letter from Treasury Secretary John Snow to congressional leaders of both parties.
The letter indicates Treasury can perform maneuvers to avoid breaching the limit. This will buy time until mid-to-late November, the letter states, a prediction the spokesman said remains the same today. Treasury has in the past resorted to such maneuvers, which include temporarily suspending investments in federal employee retirement funds.
It's unlikely federal employees and retirees would see any changes in their pensions or TSP accounts due to the accounting maneuver, however. Treasury is required to keep track of the interest the funds would have earned had the investments taken place and repay the money after debt crises pass.
The timeframe for action indicates Congress could raise the ceiling in time if it returns for a lame duck session in November. But this would be sure to provoke Democratic charges of Republican gamesmanship.
"For the [Bush] tax cuts, the bill has come due," said an aide to a member of the Blue Dog Coalition of moderate-to-conservative House Democrats. "Republicans should take the responsibility to pay that bill now instead of trying to duck and hide until after the election."
If Congress fails to complete its work on appropriations bills by October and a decision is made to pass a long-term continuing resolution and finish up next year -- without a lame duck session -- the debt ceiling would have to be dealt with before Election Day.
The Treasury spokesman said Snow would continue, as he has repeatedly, to ask Congress to raise the limit immediately. He said that Snow would work with Congress on the amount.
Republican leaders appear to believe they have no choice but to tackle the issue. "I think it is something to be addressed before we adjourn sine die," said a spokeswoman for Senate Majority Leader Bill Frist, R-Tenn. "It remains to be seen if we will have a lame duck session after the election," she said, noting Frist wants to complete all work by Oct. 8.
She said it was "too soon to say" how the ceiling increase will move on the floor.
Just back from recess, Democratic leaders do not appear to have fully formed their strategy for addressing the debt limit, but aides seemed eager to engage the matter.
"The deficit is so huge. This is a good issue for us," said one House Democratic leadership aide.
"There's a consequence to the Bush debt," remarked a staffer to one Senate Democratic leader.
A Republican Senate leadership aide countered that Democrats would run up the deficit. "The problem is that their spending plans have as much or more deficit spending than ours," the aide said.
Democrats say they will insist the debt ceiling increase not be obscured within some other legislative vehicle.
The Blue Dog aide said his group could be induced to support a "responsible" debt limit increase if the administration works with them on "meaningful" budget changes, such as discretionary spending limits and "pay-as-you-go" legislation.