Treasury Says U.S. Will Hit Borrowing Limit On New Year's Eve

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Dec. 26 2012 5:12 PM

Treasury Says U.S. Will Hit Borrowing Limit On New Year's Eve

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U.S. Treasury Secretary Timothy F. Geithner speaks on President Obama's approach to deficit reduction at the Joan Shorenstein Center on Press, Politics, and Public Policy at the Harvard Club of New York City on May 17, 2011 in New York City.

Photo by Michael Nagle/Getty Images.

With five days remaining until Washington takes the nation over the so-called fiscal cliff, the Treasury Department brings us the promise today of yet another partisan fight in the not-so-distant future. The Washington Post with the details:

The U.S. government will exhaust its borrowing authority on Monday and hit the $16.4 trillion federal debt limit, the Treasury Department said Wednesday, beginning a countdown until Congress either passes legislation to allow for more borrowing or the government defaults on its debt.
Treasury Secretary Timothy F. Geithner said in a letter to senior lawmakers that the Treasury would begin to undertake "extraordinary measures" in order to forestall default. Geithner said the measures could create about $200 billion in additional funding available to the government—giving Congress two months before it must raise the debt limit.
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That estimate is just that, however, given the current uncertainty around the fiscal cliff talks that are expected to carry on right up until—and possibly through—New Year's Eve. Because of that, Geithner wrote, "it is not possible to predict the effective duration of these measures." Nonetheless, the now-pressing need to raise the debt ceiling means that if/when lawmakers manage to reach a cliff deal, they'll then likely need to turn their attention to what is sure to be the latest game of partisan chicken. (The alternative would be to fold that debate into the current one, but adding another piece to the cliff puzzle seems unlikely to help solve things as the clock winds down.)

Josh Voorhees is a Slate senior writer. He lives in Iowa City. 

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