Snow - Government to hit debt limit in late summer

WASHINGTON -- Treasury Secretary John Snow told lawmakers Wednesday that the nation's debt limit will probably have to be raised sometime in late summer so the government can continue borrowing money. Snow made the ballpark estimate while testifying before the House Budget Committee about the president's proposed budget.

The timing could place Congress in the debate over debt financing shortly before the presidential election. The legal limit on government debt currently sits at $7.4 trillion.

Congress last year passed a record $984 billion boost when the borrowing authority ran out, after an intensely partisan debate over the president's economic policies.

Snow said the magnitude of the next increase would depend on how long lawmakers want to forestall yet another increase.

The Treasury Department also said Wednesday it will decide in May whether the government should add one or more new securities to help finance the national debt. Brian Roseboro, Treasury's acting under secretary for domestic finance, said the government expects to have a better handle on the situation in May after analyzing tax collections.

Annual deficits and the government's accumulated debt already figure squarely in Democratic election-year attacks on the president's tax and spending policies.

"The budget resembles the Titanic, but the budget deficit was no accident," said Senate Minority Leader Tom Daschle, D-S.D. "The White House has dug the biggest fiscal hole in this nation's history, and instead of reaching for a ladder they've reached for a shovel and kept digging."

Republicans defended past tax cuts and future deficits as essential to fight terrorism and revive a flagging economy.

"While the books of the government may have been in balance, the president inherited a security deficit, an economic deficit and certainly an economic growth deficit, a job creation deficit, a wasteful federal government spending deficit," said House Budget Committee Chairman Jim Nussle, R-Iowa.

The president says his budget would halve annual federal deficits in five years, taking into account the likelihood that the Pentagon will need more money for operations in Iraq and Afghanistan.