The debt limit crisis: Here we go again
Geithner Puts Issue of Debt Limit in Writing
NYT
At the end of the year, the United States will hit its statutory borrowing limit, starting a countdown clock that would within a matter of weeks lead to it failing to pay all of its obligations, according to a statement from the Treasury Department.
On Wednesday, Treasury Secretary Timothy F. Geithner wrote a letter to Congress informing it that the United States would hit its $16.4 trillion borrowing limit on Dec. 31. The Treasury will “shortly” begin undertaking “extraordinary measures” to avoid the limit — essentially moving money from pocket to pocket to give the government enough breathing room to pay all of its bills, from soldiers’ salaries to Social Security payments, after that date. But within weeks — sometime in February or March, analysts estimate — its required payments would overwhelm its receipts, leaving an unprecedented cash shortfall. That would most likely send financial markets into a tailspin and lead to another downgrade of the country’s debt rating.
This year, the debt ceiling has become a potent political football, complicating negotiations over the scheduled year-end tax increases and spending cuts, the so-called fiscal cliff. The White House wants the debt ceiling to be taken off the table in the negotiations and for Congress to raise it as a matter of course.
(Congress controls the country’s level of debt, by virtue of its controlling the government’s power to tax and spend. The debt limit is a secondary check on the total amount of outstanding debt that Congress periodically needs to raise.) But Republicans have threatened not to raise the ceiling if President Obama vetoes a bill extending the Bush-era tax cuts for household income above $250,000 a year, and more generally have indicated that they intend to use it as a bargaining chip.
(More here.)
NYT
At the end of the year, the United States will hit its statutory borrowing limit, starting a countdown clock that would within a matter of weeks lead to it failing to pay all of its obligations, according to a statement from the Treasury Department.
On Wednesday, Treasury Secretary Timothy F. Geithner wrote a letter to Congress informing it that the United States would hit its $16.4 trillion borrowing limit on Dec. 31. The Treasury will “shortly” begin undertaking “extraordinary measures” to avoid the limit — essentially moving money from pocket to pocket to give the government enough breathing room to pay all of its bills, from soldiers’ salaries to Social Security payments, after that date. But within weeks — sometime in February or March, analysts estimate — its required payments would overwhelm its receipts, leaving an unprecedented cash shortfall. That would most likely send financial markets into a tailspin and lead to another downgrade of the country’s debt rating.
This year, the debt ceiling has become a potent political football, complicating negotiations over the scheduled year-end tax increases and spending cuts, the so-called fiscal cliff. The White House wants the debt ceiling to be taken off the table in the negotiations and for Congress to raise it as a matter of course.
(Congress controls the country’s level of debt, by virtue of its controlling the government’s power to tax and spend. The debt limit is a secondary check on the total amount of outstanding debt that Congress periodically needs to raise.) But Republicans have threatened not to raise the ceiling if President Obama vetoes a bill extending the Bush-era tax cuts for household income above $250,000 a year, and more generally have indicated that they intend to use it as a bargaining chip.
(More here.)
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