OH Fun. Treasury Secretary TurboTax Tim Geithner has informed Congress that next Tuesday when we begin our way down the fiscal cliff we will have to duck because we will also be hitting the debt ceiling. If you remember it was a debt ceiling debate that helped to worsen this entire fiscal cliff mess…when the super committee that was supposed to come up with spending cuts punted and we are stuck with sequestration.
As a result, the Treasury Department will soon start using what it calls “extraordinary measures” to prevent government borrowing from exceeding the legal limit.
Such measures include suspending the reinvestment of federal workers’ retirement account contributions in short-term government bonds.
On Monday, debt subject to the limit was just $95 billion below the $16.394 trillion debt ceiling. All told, the extraordinary measures can create about $200 billion of headroom under the limit — normally about two months worth of borrowing.
But it’s unclear how much time the extraordinary measures can buy now because there are so many unanswered questions about tax and spending policies, Geithner said, referring to the lack of any resolution of the fiscal cliff.
“If left unresolved, the expiring tax provisions and automatic spending cuts, as well as the attendant delays in filing of tax returns, would have the effect of adding some additional time to the duration of the extraordinary measures,” he wrote.
So now a debt ceiling debate will be waged on top of the fiscal cliff negotiations which are going nowhere.
New Year’s Eve 1999-2000 was predicted to be a disaster for the economy—but turned out to be nothing. Right now 2012-2013 New Year’s looks like an actual disaster—fed by a president who spends too much and a GOP who gives in too much.
Fasten your seat-belts and buy the big bag of pop corn…there is a major storm brewing in Washington DC, and I am not talking about the snow.