Just in case the fiscal cliff problem wasn't bumming you out enough, Tim Geithner has politely reminded everyone that as of Monday, the Treasury Department won't be able to borrow any more money. In a letter sent to Congress on Wednesday, Geithner warned that the government will hit its legally mandated limit on borrowing—the so-called debt ceiling—in just five days and mere hours before the January 1 deadline to prevent the looming austerity crisis.
Geithner's letter also spelled out a series of steps that he will personally take to temporarily get around the debt ceiling limit, taking "extraordinary measures" to create a cushion of around $200 billion through a series of accounting tricks. That would buy the government about two months worth of borrowing costs, allowing the Treasury to pay its bills without defaulting or without Congress actually raising the debt limit. Of course, that doesn't actually account for the damage that would be done by the fiscal cliff, which could make that time even shorter.
President Obama had initially demanded a fix to the debt ceiling mechanism as part of a larger deal to solve the fiscal cliff, but with the possibility of any compromise looking like a big long shot before January 1, the debt ceiling will likely get pushed to the back burner again, setting up a second showdown immediately after the first. Without an increase in the debt ceiling, the government could eventually be forced to default on its debt payments.
Of course, it was the last debt ceiling fight that created the fiscal cliff in the first place. The Budget Control of Act of 2011 raised the debt ceiling limit, but also created the super committee that devised the tax raises and budget cuts that will automatically take effect on January 1 unless a agreement is reached.
This article is from the archive of our partner The Wire.