U.S. Treasury Department Will Suspend Sales

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By Anna Timone

 

USDeptOfTreasurySeal-2003BillThe Treasury Department on Friday will suspend sales of state and local government Treasury securities until further notice, the first action to avoid hitting the U.S. debt ceiling. The debt ceiling is expected to be reached on May 18, but the Treasury had been expected to take steps like this one in order to keep paying bills. Treasury Secretary Jacob Lew said last week that the U.S. will be able to avoid the debt limit until Labor Day. The Congressional Budget Office said Tuesday that the deadline could be as late as November.” Robert  Schroeder of Marketwatch

The U.S. Treasury’s decision brings to light the fact that the government is spending more than it takes in; thus, running up annual deficits.  Similar to personal finance, the government has been borrowing the difference to meet its obligations. The Treasury’s decision to temporarily suspend sales of state and local government only shows the extent of how far the government is willing to go to avoid running out of room to borrow and hitting the debt ceiling. On that note, I think the major problem is not the Treasury’s current temporary solution to the national debt problem, but the lack of agreement of parties in the government on how to address this problem. Republicans want to reduce future deficits by cutting back sharply on spending. Democrats have proposed a mix of spending cuts and tax increases, which Republicans strongly oppose. I am not sure how effective this solution would be and I don’t think anyone knows, but at very least the government will be able to pay its bills at least until early Fall.   Only time will tell, but once again, this action pushes the can down the road.

Anna Timone (195 Posts)


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