Obama requests another $1.2 trillion to pay US costs

President Barack Obama has formally notified Congress of proposals for a $1.2 trillion (£782bn) rise in borrowing, risking another battle with Republicans.

In a letter, Mr Obama said "further borrowing is required to meet existing (spending) commitments".

Congress has 15 days to vote on the proposal, which would raise the debt ceiling to $16.4 trillion.

Last year the government came close to default in a row over the debt ceiling.

An uneasy truce between was agreed last year over long-term plans to reduce the nation's deficit.

Although the president is expected to be able to increase the debt ceiling, the issue will still give the Republicans more ammunition to claim Mr Obama is failing on deficit reduction.

Mr Obama hoped to increase the limit by 30 December, but the House and Senate requested a delay until they were back in session.

It meant that in order to pay its bills, the administration had to dip into its Exchange Stabilization Fund, a pot of money normally used by the US Treasury to maintain currency stability.

A Treasury official said other measures, such as suspending the daily reinvestments of assets in a government pension fund, may also be needed until the debt-limit increase is secured.