So Congress says we won’t hear about the debt ceiling again until Feb. 7. Don’t count on that.
Washington is playing a shell game. Move the money here and there fast enough and nobody will be able to figure out how much cash — and, more important, debt — the US really has.
In the first place, putting the Feb. 7 date on the debt-ceiling extension instead of placing an amount on the new borrowing limits is preposterous. The numbers, I’m sure, will come out after the agreement is fully signed, sealed and — Washington hopes — forgotten.
The old debt limit was $16.7 trillion. You are probably thinking that since this was the limit, that’s where the US debt level now stands. You would be wrong.
As of 10:15 a.m. on Wednesday, when I started writing this column, the US owed $16.964 trillion and the figure was climbing steadily.
How, you might wonder, could the US borrow more money than it is authorized to borrow? Glad you asked.
That extra $200 billion or so in borrowing — the difference between the $16.964 trillion borrowed and the $16.7 trillion debt limit — was lent to ourselves.
It constitutes the “extraordinary measures” that Treasury Secretary Jack Lew has been using since the US ran out of money months ago.
Where did the money come from? Something called the Exchange Stabilization Fund (ESF), which had $24 billion as of last June; the Civil Service Retirement and Disability Fund, which has around $100 billion; and the Postal Service Retiree Health Benefit Fund. I couldn’t find a figure for the postal one.
So over the past few months, Treasury got $200 billion from these funds and possibly other sources as it used “extraordinary measures” to paper over the money it wasn’t allowed to borrow from Asia.
Now this is the key: This $200 billion has to be paid back to these funds soon and most of it with interest.
For argument’s sake, let’s say that Congress plans to allow the government to borrow another $1 trillion.
That puts the debt ceiling at $17.7 trillion.
Because of the $200 billion we owe to the ESF and the government pension funds, we’ve already taken a big bite out of the additional borrowing power.
This is like getting a loan from the bank and having to turn around and immediately give 20 percent of it to the uncle who gave you money to buy groceries.
But you really don’t have to worry, because Congress agreed that the shell game could continue in the future. As part of the deal, and at the insistence of the White House, the Treasury was authorized to use extraordinary measures in the future.
Follow the shells on this one: Treasury will pay back the $200 billion and then probably again borrow that money and maybe more if (but there really isn’t much of an “if” to it) it needs cash before Feb. 7.
Next question: Has the extra cash flow from Social Security been used in any of the extraordinary debt-ceiling measures?
Remember, despite the gloomy tales of Social Security’s dismal future, the national retirement fund still has billions of dollars flow into it each week.
That Social Security cash doesn’t just sit in a pile somewhere. Whatever isn’t needed for payments to retirees is immediately used to buy government securities. Right now, in fact, so-called intergovernmental agencies have lent $4.8 trillion of the $16.7 trillion.
During the recent period of extraordinary financing measures, did Treasury accelerate the amount of Social Security cash it made available to itself? I got no answer from a Treasury spokeswoman.
OK, which shell is the money under? Right. None of them.