Battle over Raising Debt Limit Cost U.S. More Than $1 Billion in Extra Borrowing Costs
Wednesday, July 25, 2012
Last year’s bickering between House Republicans and President Barack Obama over raising the nation’s debt limit was indeed costly, and not just because it resulted in the government borrowing even more money to keep Washington going.
By taking months to finally reach a compromise, the two sides forced the Department of the Treasury into scrambling to keep money coming in while the gamesmanship went on. That meant Treasury Secretary Timothy Geithner had to make short-term borrowing decisions that came with long-term consequences.
Altogether, the political standoff cost the government another $1.3 billion in loans, according to the Government Accountability Office. But the total cost may eventually exceed that amount..
“Many of the Treasury securities issued during the 2011 debt limit event period will remain outstanding for years to come,” the GAO wrote in its report. “Accordingly, the multiyear increase in borrowing costs arising from the event is greater than the additional borrowing costs during fiscal 2011 alone.”
Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs (Government Accountability Office)
Debt-Ceiling Battle Cost The U.S. Government $1.3 Billion: Study (by Mark Gongloff, Huffington Post)
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