WASHINGTON – Treasury Secretary John Snow (search) announced Thursday that the government has begun using various accounting procedures to avoid hitting the $7.4 trillion national debt limit (search).
Snow made the announcement in a letter to Congress, which has not passed legislation needed to boost the government's borrowing authority, which now stands at a statutory limit of $7.4 trillion.
"Given current projections, it is imperative that the Congress pect for confronting it," said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.
Congress is expected to come back in a special session after the Nov. 2 elections to deal with the debt limit and pass a massive spending bill to keep the government running.
Republican leaders did not want to take up the debt issue before the election and open themselves up to Democratic attacks about the record federal budget deficits run up during President Bush's first term in office.
The government recorded a $374 billion budget deficit (search) last year -- a record in dollar terms -- and projections call for this year's to be even larger, more than $400 billion, which would set a new record.
Snow said in his letter he would begin halting new investments in a retirement fund for federal workers as a way to stay under the debt limit. Snow said the maneuvers would have no lasting impact on the fund because the government would make up the lost investments and any lost interest payments once the government's borrowing authority has been boosted.
Snow also noted that the same maneuver had been used by his predecessors.
Sen. John Kerry, the Democratic presidential challenger, has attacked Bush for taking the government from surpluses to record deficits, a switch that Kerry blames on large tax cuts Kerry contends favor the wealthy.
Bush, however, counters that the tax cuts helped to lift the economy out of the 2001 recession and that the budget deficits were caused by the need to beef up spending to fight two wars and protect the homeland against terrorist threats.
A Treasury Department spokeswoman said the battle over the debt limit was not expected to affect the Treasury's announcement of when it will hold its next quarterly auctions of government securities.