US debt shoots up after ceiling lifted


Sun, Oct 20, 2013 - Page 13

The US Department of Treasury moved quickly to feed the country’s appetite for borrowing after an 11th hour political deal lifted the debt ceiling to avoid default, data showed on Friday.

Treasury figures showed the government went to the markets for an additional US$300 million almost as soon as the US$16.7 trillion cap was removed with the signature of US President Barack Obama in the early hours of Thursday morning.

By the end of Thursday, the country’s debt had risen to US$17.03 trillion, Treasury data showed.

At least part of the rise came with the resumption of the sale of state and local government series securities, which were suspended on May 17 after the US$16.7 trillion ceiling was set and the Treasury needed to juggle operations to remain beneath it for as long as possible.

The US needs to borrow increasingly more to bridge a monthly deficit averaging about US$60 billion.

However, refusal by congressional Republicans to raise the ceiling in order to extract political concessions from their Democrat rivals and the White House almost forced the Treasury into a position of being cash short and defaulting on its obligations, including the debt.

A last-minute political deal on Wednesday averted that possibility, but it stipulated that a fresh cap be instituted on Feb. 7 next year, leaving room for a new battle of brinkmanship over government finances.