Debt Ceiling: Analysis of Actions Taken During the 2003 Debt Issuance Suspension Period
GAO-04-526
Published: May 20, 2004. Publicly Released: May 20, 2004.
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Highlights
GAO is required to review the steps taken by the Department of the Treasury (Treasury) to avoid exceeding the debt ceiling during the 2003 debt issuance suspension period. The committee also directed GAO to determine whether all major accounts that were used for debt ceiling relief have been properly credited or reimbursed. Accordingly, GAO determined whether Treasury followed its normal investment and redemption policies and procedures for the major federal government accounts with investment authority, analyzed the financial aspects of actions Treasury took during this period, and analyzed the impact of policies and procedures Treasury used to manage the debt during the period.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Treasury | The Secretary of the Treasury should seek the statutory authority to restore the losses associated with the October 2002 early redemption of FFB 9(a) obligations. The amount of the restoration should be computed in a manner that maintains equity between the Civil Service fund and Treasury. |
Treasury drafted a bill entitled "Federal Trust Funds and Other Federal Entities Restoration Act of 2006" and forwarded it to OMB in July 2006. In accord with our recommendation, the bill sought statutory authority to restore losses associated with the October 2002 early redemption of FFB obligations, computed in a manner that would maintain equity between the Civil Service Retirement and Disability Fund and the Treasury general fund. Based on the Secretary of the Treasury's action to seek legislative authority in accord with our recommendation, we consider this recommendation implemented.
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| Department of the Treasury | The Secretary of the Treasury should direct the Under Secretary for Domestic Finance to document the necessary policies and procedures that should be used for exchange transactions between FFB and a federal government account with investment authority during a debt issuance suspension period and seek any statutory authority necessary to implement the policies and procedures. |
In the 60-day letter dated July 19, 2004, Treasury stated that the Inspector General for Treasury, who oversees the audits of the Federal Financing Bank (FFB), has agreed to include a prior review of significant FFB exchange transactions in its annual audit contract. Treasury stated that it is working to draft other policies and procedures to be used for future exchange transactions between FFB and a federal government account. Treasury expects to have internally approved policies and procedures within 180 days. On November 28, 2006, FFB officials forwarded us final approved debt limit procedures relative to the FFB and the recommendation was closed accordingly.
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Topics
Budget obligationsDebtDebt subject to statutory limitationDeficit financingFinancial analysisInvestmentsLossesPerformance measuresProgram managementStrategic planningTrust fundsFederal employees retirement system