Sharp Rise in U.S. Debt Could Constrain Obama's Economic Plans

The U.S. government is on course for an unprecedented borrowing binge in coming months, a development that could constrain President-elect Barack Obama's economic agenda.

The Treasury Department laid out near-term borrowing plans Wednesday, saying it expects to tap financial markets for $550 billion in the final three months of 2008 and another $368 billion in the first three months of next year through issuing Treasury securities with a wide range of maturities.

Economists project that total government borrowing could pass $1.5 trillion in the fiscal year, which ends next September, in one year pushing up the government's total debt burden by more than 25 percent, a large and possibly jolting increase.

The sharp rise poses a potential dilemma for Mr. Obama's activist agenda. Few economists believe the Treasury will be constrained in the next year in its ability to manage its rising borrowing needs or in advancing another fiscal stimulus program. But in the long run, rising government debt could make it harder for Mr. Obama to pursue new spending and tax-cut programs aggressively.

"I don't think that anything on the stimulus end will be constrained by these deficits," said David Greenlaw, a Morgan Stanley economist. "But if you're talking about health care reform and some of these longer-term programs, there is some constraint there."

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