Bond traders rejoice; you're about to have a lot of product to sell.

The Treasury said last week that the government would reach its borrowing limit by October 1.

There was a time when debt ceiling increases were a huge political problem. Members of Congress, who were almost always happy to vote to increase spending and cut taxes, were usually just as reluctant to vote to allow the government to borrow the funds that would allow it to actually spend more and collect less. Indeed, some representatives and senators who voted to spend more and tax less would routinely rail against federal borrowing and the deficit.

Not only were the votes to pass a debt ceiling increase usually hard to round up but, because debt ceiling increases were considered "must-pass" bills that eventually had to be adopted and could not be vetoed, a variety of extraneous provisions were often attached. For example, the Gramm-Rudman-Hollings budget process put in place in1985 most likely would never have been enacted had it not been attached to a debt ceiling increase.

Those days are gone. With remarkably little controversy, Congress is about the raise the federal debt ceiling again. The House automatically passed an $850 billion increase in the government’s borrowing limit when earlier this year it adopted the conference report on the FY08 congressional budget resolution. The Senate has no similar automatic process (House Republicans refer to it as the Hastert Rule; Democrats call it the Gephardt Rule) so a separate vote is needed.

In past years, the Senate has approved a debt ceiling increase that was different in some way from what was approved by the House under the Hastert/Gephardt Rule. That required the two houses to compromise their differences and take another vote on the revised bill.

However, the Senate Finance Committee last week agreed to increase the debt ceiling by the same $850 billion approved by the House with no extraneous provisions.

Therefore, unlike what has happened before, there will likely be no disruption in the bond market because of political games involving the debt ceiling. Scheduled Treasury auctions should be unaffected and bond traders will be able to focus on what they consider most important, like the New York Yankees.

Tthe bigger issue for bond traders is just around the corner as the volume of federal borrowing will grow considerably.

The deficit will just be the start. The official forecasts understate the spending that will occur and overstate the revenue that will be collected. When the policies most likely to be adopted rather than the formula-based projections are taken into account, federal spending for both domestic and military purposes will be perhaps as much as $100 billion a year higher by fiscal 2012 than it will be in 2008.

The alternative minimum tax is certain to be revised. That's $50 billion to $60 billion a year in revenues currently being assumed that will not be collected.

But $150 billion per year more in bororwing will pale in comparison to the amount of federal debt that will have to be refinanced. The Bush administration has used short-term debt to take advantage of relatively low intrerest rates and keep interest payments low while it was in office. That debt will roll over at higher rates than are current being paid in the years ahead.

So in addition to a growing amount of new debt that will have to be sold, a significant amount of the close to $9 trillion that has already been borrowed will have to be refinanced in the next few years.

That shodjl keep traders happy regardless of what happens in the playoffs and World Series.