Treasury downsizing program as debt limit nears

While not surprising, the move is the first of what is expected to be several taken by the Treasury, as the amount of room it can maneuver under the current $14.3 trillion debt ceiling continues to shrink.

Lawmakers on Capitol Hill are still duking it out over what exactly should be done on the federal debt limit, or what measures should accompany an increase.

Republicans are demanding that any vote to increase the statutory ceiling include promises of major spending cuts, with some pushing for a vote on a balanced budget amendment to be part of the package.

But Treasury Secretary Timothy Geithner warned Congress on Jan. 6 of catastrophic economic consequences, including a potential default on U.S. debt, if the ceiling is not raised before it is hit sometime this spring. Geithner estimated the limit could be reached as early as March 31. Thursday's move is not expected to buy any more time for the government, as Geithner accounted for the downsizing in his expectations.

Members of the Republican Study Committee unveiled legislation Wednesday that they said would protect the U.S. from default if the debt limit is reached, in an effort to remove that dire consequence from the debate.