Terry Jeffrey

"Today, the United States has reached the statutory debt limit," Treasury Department Spokeswoman Colleen Murray said in a May 16 statement.

Did it really? Or is the legal debt limit merely a sleight-of-hand tactic in the most high stakes shell game every played?

Take a look at what the Treasury Department has reported on its Daily Treasury Statements since May 16, when Treasury said it had "reached the statutory debt limit."

Table III-C of the statement is titled "Debt Subject to the Limit." The May 16 statement -- giving the status of the government's accounts as of the close of business that day -- correctly stated that the national debt was subject to a limit of $14.294 trillion set in a law enacted Feb. 12, 2010.

This May 16 statement also said the "total public debt subject to limit" that day stood at $14.293975 -- a mere $25 million below the limit.

Whew! Close call, right?

OK, now move forward five weeks to the Daily Treasury Statement for June 20.

At first glance, it looks pretty good. Table III-C still says the legal limit on the debt is $14.294 trillion -- correctly reflecting the fact the Congress and President Obama have not agreed to a new law increasing the limit.

Even better, the line in Table III-C that lists the amount of the "total public debt subject to limit" says it is still $14.293975 trillion -- still exactly $25 million below the limit.

At a quick glance, the June 20 Daily Treasury Statement seems to say the federal government has not increased the national debt at all in five weeks.

But take another look.

The federal government's debt is essentially divided into two parts. One consists of publicly traded bills, notes and bonds that you and I and the Chinese and Japanese can buy from the U.S. government in public auctions and trade with each other in the open market.

The other part is what the Treasury calls "intragovernmental" debt. This is money the Treasury has taken and spent from surplus Social Security and Medicare taxes and from payments into federal-worker retirement programs and other streams of federal revenue that are deposited into so-called "trust funds."

These trust funds don't have actual money in them -- only IOUs from the Treasury that essentially say that when Social Security, or Medicare, or federal worker retirement programs, etc., need the money back to pay benefits, the Treasury will go out and tax or borrow the money away from people to make good on what they owe the "trust funds."

Terry Jeffrey

Terence P. Jeffrey is the editor-in-chief of CNSNews

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