OMB Watch released a statement yesterday about the vote in the Senate to increase the nation's debt limit for the fourth time in the last five years.

Read the statement

The Senate will likely vote to increase the debt limit at some point tomorrow. Below are some good articles on the issue.

New York Times: Senate Could Vote Thursday to Hike Debt Limit

Los Angeles Times: Senate Stalls Debt-Ceiling Decision

The Hill: Debt Limit Vote Seen as Budget Reform Lever

When $8 Trillion Isn't Enough

Secretary of the Treasury John Snow sent a letter to Congress Monday saying he has taken "all prudent and legal actions” to stay under the $8.184 trillion debt limit and again strongly urged passage of an increase “immediately." Congress, which must act or else they could default on payments to bond holders or fail to make other scheduled government payments, will most likely pass a debt limit increase. This will mark the fourth time the debt limit has needed to be increased under President Bush. If this new hike is approved, the limit will have jumped by $3 trillion since he took office.

It is expected, however, that Senate Democrats will push for full debate on the increase. It is likely they will seek to amend the current situation and push for full restoration of pay-as-you-go rules, which would require all new mandatory spending and tax cuts to be offset.

The Congressional Budget Office released the Monthly Budget Review yesterday, reporting that the government incurred a $219 billion deficit in the first five months of FY 2006. The CBO is estimating a total deficit for FY2006 to be $371 billion. The deficit in February was $121 billion, which is $7 billion more than the deficit recorded in February 2005.

The Congressional Budget Office has completed a preliminary analysis of the President's FY07 Budget.

• Analysis
  
• Supplemental Data

The report found that the President's proposal will:

• Spend about $925 billion on discretionary programs in FY07;
  
• Add $35 billion to the CBO's current deficit projections, putting the deficit projection at $371 billion;
  
• Reduce revenues by nearly $9 billion for FY07;
  
• Reduce revenues by $282 billion from 2007-2011 if some of the President's expiring 2001 and 2003 tax provisions are extended;
  
• Increase outlays by $27 billion (mostly in military spending in Iraq and Afghanistan);
  
• Increase defense funding by an average of 2.8 percent per year through 2011; and
  
• Reduce Medicare outlays by $138 billion from 2007-2016.

The report also states the deficit will decline as a share of GDP, going from 1.6 percent in 2008 to 1.3 pecent in 2009, and finally stabilizing at approximately 1 percent annually through 2016. These deficit projections, however, exclude the costs of supplemental emergency appropriations, the President's proposal for private Social Security Accounts, as well as the cost of fixing the Alternative Minimum Tax.

Today Sens. Harry Reid (D-NV), Max Baucus (D-MT) and Kent Conrad (D-ND) sent a letter to Majority Leader Bill Frist (R-TN) concerning the Debt Limit. Senators Baucus and Conrad spoke on the floor today to discuss this issue and the letter.

• The charts used by Senator Conrad
  
• The letter to Sen. Frist

The Treasury Department sent a report to Congress in December, reporting the FY05 federal deficit on an accrual basis as being $760 billion, a far higher number than $319 billion, which is what is generally accepted as the deficit level for FY05.

The $319 billion number uses the government's accepted barometer of cash outlays versus revenues, while the $760 billion number takes into account accrued benefits owed to veterans and federal employees. Rep. Jim Cooper (D-TN), a member of the Blue Dog Coalition, said:

"Businesses are required by law to use accrual accounting. If you want Congress to be run like a business, you need accrual accounting."

This Treasury report is garnering increasing attention from lawmakers who are worried about the nation's budget books, and there was a hearing yesterday about the matter. GAO Comptroller David Walker said the $760 billion net figure as well as the $8 trillion debt through the end of FY05 left out the costs of unfunded Social Security, Medicare, veterans' and other liabilities. He said:

"Given these and other factors, a fundamental re-examination of major spending programs, tax policies and government priorities will be important and necessary to put us on a prudent and sustainable fiscal path. This will likely require a national discussion about what Americans want from their government and how much they are willing to pay for those things."