The Bush administration expressed confidence Wednesday that the United States would be able to maintain its top-notch credit rating even as the government scrambles to find new ways of expanding debt sales to cope with soaring budget deficits.

“It is a huge advantage to have that AAA-status and we are committed to that,” Anthony Ryan, Treasury’s acting undersecretary for domestic finance, told reporters as he unveiled plans for financing $171 billion in borrowing during the current July-September quarter, the second highest total on record.

Those borrowing needs have exploded this year as the government has had to cope with a sagging economy and the need to finance more than $90 billion in economic stimulus payments made over the past three months to individuals in an effort to keep the country out of deep recession.


The Bush administration expressed confidence Wednesday that the United States would be able to maintain its top-notch credit rating even as the government scrambles to find new ways of expanding debt sales to cope with soaring budget deficits.
“It is a huge advantage to have that AAA-status and we are committed to that,” Anthony Ryan, Treasury’s acting undersecretary for domestic finance, told reporters as he unveiled plans for financing $171 billion in borrowing during the current July-September quarter, the second highest total on record.
Those borrowing needs have exploded this year as the government has had to cope with a sagging economy and the need to finance more than $90 billion in economic stimulus payments made over the past three months to individuals in an effort to keep the country out of deep recession.
Those problems are occurring at the same time that global financial markets have been roiled by reports of multibillion-dollar losses by giant banks and investment houses, reflecting soaring losses on mortgage debt.
“I am quite confident we will emerge from this with a stronger capital market,” Ryan told reporters. “I have a great deal of confidence in our economy and our ability to work through these challenges.”
Ryan praised the decision by Congress to include an increase in the government’s debt limit to $10.6 trillion, up by $800 billion, from the current level, when it passed a sweeping housing rescue package last week. President Bush signed that bill which included the higher debt limit into law on Wedesday. One of its provisions expands the authority of the government to throw a financial lifeline to Fannie Mae and Freddie Mac, the two financial giants who own or guarantee nearly half the nation’s mortgages.
Ryan refused to make an estimate of how long the new debt ceiling will be in effect but said it was helpful that Congress had been “proactive in managing the debt limit.” Often raising the debt ceiling has sparked a huge political showdown with Democrats using the debate to criticize President Bush for presiding over a surge in the national debt while he has been in office.
The Treasury announced that it would raise $27 billion next week in two auctions of new 10-year notes and 30-year bonds, all part of $171 billion it will raise over the current quarter, a quarterly amount exceeded only by $244 billion the government borrowed in the January-March quarter this year.
The increased borrowing reflects the exploding federal budget deficit which is projected to more than double in size this year to $389 billion and to hit an all-time high of $482 billion in the 2009 budget year. The previous record deficit was $413 billion set in 2004.
The administration released the new deficit forecasts on Monday. It blamed the surge on the sagging economy and the effort to keep the country from falling into a deep recession by mailing out 130 million economic stimulus payments.
Democratic critics, however, charged that the soaring deficits showed the total failure of the Bush administration to put the government’s fiscal house in order. They contended that whoever wins the presidency in November will inherit a huge fiscal mess that will severely restrain the next president’s ability to fulfill his own campaign promises.
Treasury officials said that a variety of options for increasing the government’s debt sales were being considered including greater frequency of sales of 10-year notes and 30-year bonds, but that no decisions had yet been made. In April, the government announced it was bringing back the one-year Treasury bill which it had stopped issuing in February 2001 during a period when the budget was in surplus.
The 2001 surplus, the fourth in a row, was also the last time the government’s books were in the black as the 2001 recession and increased spending to fight wars in Afghanistan and Iraq and, Democrats contend, Bush’s first-term tax cuts brought a return of deficits.
The deficit estimate of $482 billion for the 2009 budget year, which will cover the first year of the new president’s term, could soar higher because it includes only a partial payment for the wars in Iraq and Afghanistan.