The nonpartisan Government Accountability Office said Monday that the $1.3 billion in costs came as the result of increased borrowing costs for the Treasury Department. The final cost is expected to climb higher as multi-year obligations and other outstanding costs are added later.
Why did it cost so much money? Because as lawmakers and President Obama fought over the details, the Treasury Department had to suspend investments in several funds for federal employees, postal workers and other reserves in order to pay the nation’s financial obligations, the GAO said. Treasury then had to spend more money and time after the fight to restore those funds.
With all that money and manpower spent, GAO — in its classically understated fashion — recommended that “Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue to avoid potential disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way.”
For those of you who missed last summer’s political drama, lawmakers eventually agreed to raise the federal debt limit to $16.4 trillion, a $2.1 trillion increase that came with an agreement to cut a similar amount in federal spending over the next decade. Just under $1 trillion took the form of annual caps on agency spending. The rest is slated to come through even deeper, automatic cuts at the Pentagon and other agencies beginning in January. Both parties are now seeking alternative deficit-reduction strategies in order to avoid steep cuts in military and non-defense spending — commonly known as “sequestration.”
(RELATED: What is sequestration?)
The debt fight prompted Standard & Poor’s to drop the nation’s AAA credit rating and blame “political brinkmanship” for making the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.”
The fighting also spurred thousands of hours in extra work for the Bureau of Public Debt, the tiny agency responsible for diverting funds in order to avoid exceeding the debt limit. GAO’s description of what went on at the BPD is worth a full read:
BPD estimated that managing federal debt when delays in raising the debt limit occurred in 2011 and January 2012 resulted in almost 5,750 hours of work, including over 400 hours of overtime and compensatory time. This included more than 1,200 hours in the weeks prior to the use of extraordinary actions for meetings, preparation of parallel accounts and spreadsheets to use in tracking uninvested principal and interest losses, tests of the accounting system, and training staff. The majority of time was spent implementing the extraordinary actions. BPD estimated that it spent almost 63 staff hours per business day on debt limit–related activities from May 16, 2011, through August 1, 2011, and almost 31 staff hours per business day from January 4, 2012, through January 27, 2012. After the debt limit was increased, BPD estimated that it spent over 500 hours on activities such as restoring uninvested funds and preparing reports.
In other words, a tiny understaffed agency spent almost 5,570 hours working to ensure the nation didn’t default on its debts and then devoted another 500 hours to put everything back together again.
The nation’s current debt sits at about $15.9 trillion and Treasury is expected to hit the debt ceiling again early next year. What will it cost us then?
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Staff writer Lori Montgomery contributed to this report.
Follow Ed O’Keefe on Twitter: @edatpost
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