Treasury Official: US Probably Won’t Have to Raise Debt Ceiling This Year

Lawmakers might not have to address raising the country's politically sensitive debt ceiling this election year, a senior Treasury official said.

The country nearly went into default in 2011 when the country reached its borrowing limit, though Congress agreed to lift it at the very last moment.

The government will approach the ceiling again later this year, though the Treasury can take steps such as shuffling funds and postponing certain payments to delay the threat of default until 2013, after the election.

“As you know we have some extraordinary measures we can deploy to earn some more time before we need to raise the debt ceiling,” said Treasury Under Secretary for Domestic Finance Mary Miller, according to The Wall Street Journal.

“I expect at this time that we probably will move into 2013 so that does not become an issue we have to resolve in 2012.”

The news should be welcome news to Congress, which is facing enough challenges as it is, including expiring tax breaks and automatic cuts to government spending that kick in at the end of the year, a combination known as a fiscal cliff that could send the country back into recession if left unchecked.

The automatic cuts to government spending were born out of a compromise to raise the debt ceiling in 2011.

The debt ceiling currently stands at $16.4 trillion.

Standard & Poor's downgraded the United States even though the country avoided default, pointing out that hefty debt burdens remained, while political brinkmanship threatened action.

Investors took note, demanding more in return to put their money in U.S. government debt in 2011, which cost the government $1.3 billion last year, according to estimates compiled by the Government Accountability Office.

"We found that the 2011 debt limit event led to a premium on Treasury securities with maturities of two years or more while Treasury securities with shorter maturities either experienced no change or became slightly less costly relative to private securities," the GAO reported, according to The Washington Post.

"Applying the relevant increase or decrease in the yield spread ... to all Treasury bills, notes, bonds, CM [cash-management] bills and TIPS [Treasury Inflation-Protected Securities] issued during the 2011 debt limit event period, we estimated that borrowing costs increased by about $1.3 billion in fiscal year 2011."