(CNSNews.com) - Federal borrowing is on pace to hit the legal limit on the national debt in less than a week.
As set in a law passed by Congress and signed by President Barack Obama on Feb. 12, 2010, the legal limit on the national debt is $14.2940 trillion. As of the close of business Tuesday, according to the Daily Treasury Statement released at 4:00 pm today, the portion of the national debt subject to this legal limit was $14.268365 trillion. (The total national debt, including the portion exempted from the legal limit, was $14.3205 trillion.)
This left the U.S. Treasury with the authority to borrow only an additional $25.635 billion before it hits the statutory debt limit.
On April 4, Treasury Secretary Timothy Geithner sent a letter to Senate Majority Leader Harry Reid (D.-Nev.) in order to warn Congress that the Treasury was approaching the legal debt limit. In an appendix to this letter, Geithner pointed to the rapid pace at which new debt was accumulating.
“On average,” Geithner wrote, “the public debt of the United States increases by approximately $125 billion per month (although there are significant variations from month to month).”
In a 31-day month, $125 billion in new debt works out to an average of $4.03 billion in new debt per day. At that pace, the $25.635 billion in legal borrowing authority the Treasury had left at the close of business on Tuesday would be exhausted in less than seven days.
Geithner’s letter did not spell out the time period he used to determine that the debt increases at approximately $125 billion per month. In fact, according to the official debt figures published by the Treasury itself, the debt has been increasing at a somewhat faster pace than $125 billion per month during the Obama presidency.
On Jan. 20, 2009, the day Obama was inaugurated, the portion of the nation debt subject to the legal limit (a small portion of the debt is exempted from the limit) was $10.568142 trillion. By April 19, 2011, the portion of the national debt subject to the limit had increased to 14.268365 trillion. That means that during the first 821 days of Obama’s presidency the debt increased by $3.700223 trillion—or $4.5 billion per day.
The actual average monthly increase in the debt during Obama’s presidency has been $139.5 billion.
In fact, in the past six days, the debt has increased at a far faster pace than either the $4.03 billion per day average suggested by Secretary Geithner or the $4.5 billion per day that the Treasury has increased the debt since Obama became president. At the close of business last Wednesday, the debt subject to the limit was $ 14.211984 trillion--or $56.381 less than the debt recorded at the close of business Tuesday.
In other words, in the six days of Thursday, Friday, Saturday, Sunday, Monday, Tuesday, the national debt increased $56.381 billion---or almost $9.4 billion per day.
At that pace, the Treasury would exhaust its $25.635 in remaining borrowing authority in less than 3 days.
In his April 4 letter to Sen. Reid, Geithner said the Treasury was then projecting that it would hit the debt limit by May 16.
“The Treasury Department now projects that the debt limit will be reached no later than May 16, 2011,” Geithner wrote. “This is a projection based on the expected level of tax receipts, the timing of our commitments and obligations over the next several weeks, and our judgment concerning the level of cash balances we need to operate.”
Geithner also warned that this projection might change—but not to the advantage of Congress.
“Although these projections could change,” Geithner wrote, “we do not believe that they are likely to change in a way that would give Congress more time in which to act.”
When Treasury is about to reach the debt limit, the Treasury secretary can take certain extraordinary steps to stretch the Treasury’s borrow-and-spending authority. According to Geithner, however, these extraordinary measures would only give the government another $165 billion in borrowing-and-spending room.
That extra room is about what the government would typically borrow in 40 days—using Geithner’s conservative estimate that it borrows an average of $125 billion per month.