For Immediate Release
March 7, 2006
Contact: Kate Incontrera, 410 454-0417 or kincontrera@dailyreckoning.com www.dailyreckoning.com: America's Debt Ceiling: A Dangerous Shell Game BALTIMORE, MD - The federal government is fast pressing up against it's legal debt ceiling. With just $25 million wiggle room, U.S. Treasury Secretary John Snow is urging Congress to raise the limit quickly to prevent the United States from going into default. One financial expert warns that without the new borrowing limit, the U.S. Treasury is playing a dangerous shell game. "We all know that the U.S. government is deeply in debt," says Dan Denning, author of The Bull Hunter and contributor to The Daily Reckoning, "but what will surprise many is just how much of that debt must be paid off in the next two years." America must pay back $614 billion this year as long-term notes and bonds mature. But in addition, there is nearly $900 billion in shorter-term debt that must be "rolled over" within three to six months. "More debt must be issued to pay what we owe on the old debt - and to finance continuous deficit spending," says Denning. What's more, these figures do not include rising "off-budget" expenditures like the wars in Iraq and Afghanistan. The wars too, will incur new borrowing by the government. For the U.S. Treasury Department to roll over the nearly $1 trillion in short-term debt this year, it will have to pay at least 100 basis points more in interest than it did just three years ago. Going forward, nearly $1 trillion in new short-term debt will have to be sold each year to cover short-term obligations; either that, or shifted toward the longer term, which will in turn drive up long term rates. "Hence the American dilemma," says Denning. "How do you convince lenders to lend when you can't even obey your own laws about spending limits? It's one thing to sell short-term debt with a respectable yield, but who will be willing to hold any American obligations - short or long term - as the nation's financing needs grow larger relative to its productivity?" For more from Dan Denning, see http://www.dailyreckoning.com Dan Denning is the author of The Bull Hunter, and editor of Strategic Investment, one of the most respected "big-picture" investment newsletters on the market. A former specialist in small-cap stocks, Dan has been at the helm of Strategic Investment since 1999 - where, drawing from his network of global contacts, he has designed an investment strategy that takes into account global political and economic trends. Brought to you by Agora Financial, and written by the NY Times bestselling authors, Bill Bonner and Addison Wiggin, The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing and everyday life into an educational and entertaining format that has been engaging their readers for over six years. SOURCE dailyreckoning.com #### | 
