Debt limit hit; pension deposit delayed
UNDERSCORES SCOPE OF DEFICIT
Congress won't act until after election
BY Jonathan Weisman: The Washington Post; Oct. 15, 2004

WASHINGTON - The federal government reached its $7.4 trillion debt ceiling yesterday, forcing Treasury Secretary John Snow to delay contributing to one of the federal employees' pension systems to avoid running out of cash and possibly defaulting on government debt.
  The situation probably will prove temporary, as it has in the past. Congressional leaders said that when they return for a lame-duck session after the election, they will raise the debt ceiling to allow the government to borrow the money it needs to pay bills. At that point, any overdue contributions to the pension fund will be paid, with interest.
  But it also underscores the political sensitivity of record government deficits during an election year.
  Snow has pleaded with Congress since Aug. 2 to raise the debt limit, but Senate Republican leaders -whose aides said they were worried about the possible political. backlash -adjourned for the campaign this week without acting on Snow's request. The Treasury secretary repeated his plea yesterday in a letter to Senate Majority Leader Bill Frist, R-Tenn., appealing to his "commitment to maintaining the full faith and credit of the U.S. government."
  Congressional leaders in turn promised to raise the borrowing limit as soon as they reconvene. The House passed a $690 billion increase in the debt ceiling in a 2005 budget resolution, but it was never adopted by the Senate.
  "Typically with Congress, they do it when they need to do it," said John Feehery, spokesman for the speaker of the House, Dennis Hastert, R-Ill. "And we'll do it when we need to do it."
  The federal government regularly sells Treasury bonds to finance the difference between the amount of money it collects in taxes each year and the amount it spends. The debt ceiling was first imposed in 1917 to act as a brake on the total amount of accumulated debt the government owes.
  Today the total debt includes money owed either to private investors or, in the case of money borrowed from surplus Social Security taxes, to other government programs.
  Since then, the Treasury has on five occasions delayed pension-fund payments as it approached its limit on borrowing. Three of those five incidents came under President Bush - in 2002, 2003 and yesterday - as Republicans in Congress have become leery of voting to raise the debt limit.
  The others were during the rapidly spiraling deficits of 1985 and the budget showdown between the new Republican Congress and President Clinton in 1995.
  When Bush took office, the debt ceiling was $5.95 trillion and had last been raised in 1997.
  Since 2002, Congress has raised the borrowing limit by more than $1.4 trillion, as the government ran increasingly large deficits of $158 billion in 2002, $375 billion in 2003 and $413 billion for fiscal 2004, which ended in September.
  Yesterday, the Treasury Department released its final 2004 deficit figure, which came in below initial forecasts but still at a record level in dollar terms.
  If Republicans had hoped to avoid the issue before the election, Democrats sought to make them pay. "This is a heck of a burden to pass on to the next generation," said Rep. John Spratt of South Carolina, the ranking Democrat on the House Budget Committee.
  Campaign aides of Democratic presidential nominee John Kerry noted that Bush's 2001 budget anticipated the debt ceiling would not have to be raised until 2008. And, they said, the government has run up more debt in the past 17 months than was amassed under all the presidents from George Washington to Ronald Reagan. "George Bush continues to make history for all the wrong reasons," said Kerry campaign spokesman Phil Singer.
  But budget-watchdog organizations took Kerry and Bush to task for what they see as a failure to take the deficit seriously.
  "Following the presidential debate where more attention was given to the candidates' wives than to the budget deficit ... it is hard to see where the leadership to put the country back on the path of fiscal responsibility will come from," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
  Some independent analyses have concluded that the mix of tax cuts and spending plans outlined by both candidates would inflate the budget deficit.


DeLay's district to get loan for broadband
Reuters

  WASHINGTON - Nearly $23 million meant to bring the World Wide Web to the rural United States instead will underwrite fast Internet service to affluent Texas suburbs represented by House Majority Leader Tom DeLay, R-Texas, a situation Democrats and critics called outrageous yesterday.
  The loan, from the rural-development wing of the Agriculture Department, includes work in communities outside Houston, in DeLay's district. Farm and telephone groups questioned the wisdom of the $22.7 million loan to ETS Telephone Co. & Subsidiaries, a Houston firm that advertises itself as providing telecommunications for "quality master-planned communities."
  The loan would help bring broadband service to 9,272 households and businesses just outside the Texas city, said the Agriculture Department.
  Congress created the program in 2002 to help rural areas, including towns of fewer than 20,000 people, gain Internet access. The ETS project qualified, a USDA official said, because it was in a traditionally agricultural area and met the population criteria.
  Critics said the USDA loan was misspent.
  ETS chief Richard Gerstemeier was not available for comment yesterday. A spokesman for DeLay had no comment.