Debt-Ceiling Fight Raised Borrowing Costs by $1.3 Billion

The fight last summer over whether to raise the debt ceiling increased the Treasury?s borrowing costs by about $1.3 billion in fiscal year 2011, and the bill is expected to climb, according to the Government Accountability Office.

In a report released on Monday, the investigative arm of Congress found that the battle between Republicans and Democrats over the conditions to increase the debt limit to its current level of $16.4 trillion led to uncertainty in the debt markets and higher borrowing costs. It said that a full accounting would be available later. ?Further,? a summary of the report read, ?according to Treasury officials, the increased focus on debt limit-related operations as such delays occurred required more time and Treasury resources, and diverted Treasury?s staff away from other important cash and debt management responsibilities.?

The bill, which cut trillions of dollars from its spending, ended a lengthy partisan battle just hours before the government?s borrowing authority was set to run out. It also set forth a process that led to huge scheduled cuts to the Pentagon and other areas, which Congress is again seeking to undo. Another fight over the debt ceiling is set to start after the election when Congress is expected to return for a lame-duck session.

Source: http://thecaucus.blogs.nytimes.com/2012/07/23/debt-ceiling-fight-raised-borrowing-costs-by-1-3-billion/

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