WASHINGTON — The federal government will likely hit its borrowing limit before the end of the year, setting up another showdown over the federal debt immediately after the 2012 presidential election, according to Treasury Secretary Timothy Geithner.
In testimony to the Senate Finance Committee on Thursday, Geithner said he expects that the debt ceiling will be hit after Sept. 30, the end of the fiscal year, but before the beginning of 2013.
Under an agreement forged in the summer, the Treasury can borrow up to $16.4 billion before returning to Congress for permission to borrow more. The debt currently stands at $15.4 billion.
While some officials had hoped the borrowing authority would last through early 2013, that appears unlikely. Congress is close to extending a payroll tax cut through the end of this year without paying for it, requiring about $100 billion more in borrowing.
“I think even with agreement and prospect on the payroll tax, we still do not expect that [we will reach] the debt limit until quite late in the year, significantly after the end of the fiscal year but before the end of the calendar year,” Geithner said.
A fight over raising the debt limit may be one of three hugely consequential issues to be decided by Congress and the president immediately after the election. The other two are the expiration of the Bush-era tax cuts for the upper and middle class and automatic, deep spending cuts in the budgets of the Pentagon and domestic agencies set to begin next year.
Guessing when the country will hit the debt limit is an imprecise art. In addition, Congress has given the Treasury secretary a series of measures, such as using money in a special currency fund and postponing payments to civil pensions, to buy time if needed.
The odds of reaching the debt limit before the election are unknown, but Treasury officials have strongly suggested they’d invoke those extraordinary measures if that were to happen.
We have over 100 comments on something dumb like gay marriage and none on this very important topic. This country is boned.
I would agree if they were talking trillion instead of billion in the article.
this country has been getting boned for quite some time
and pretty sad to see that the Washington Post can’t even get the Trillion vs. Billion thing down when it comes to the National debt, which should be recorded as TRILLION!!!!
That’s impossible! Obama promised 4 years ago to cut the deficit in half! This article is nothing but a lie!
Obama’s plans for re-election are based on flooding the country with money while making the argument that he needs four more years to carry through with his initiatives. The economy will experience mild growth based on a natural return to limited manufacturing but inherent problems will not be addressed by the Obama policy. Unemployment rates will go down as workers “drop out” but the average pay for the lower 50% will continue to decrease as desperate workers accept anything with the realization that conditions will not improve. A country as big as USA does many good deeds and Obama will take credit like most incumbents; however, the country is going in the wrong direction. We need change and Ron Paul offers the most potential.
Ron Paul 2012
Say no to the failed Oromney status quo!!!!!
Keep Borrowing, and borrowing and let all us taxpayers keep our heads in the sand and make believe its not happening. Then we all get to talk about the SEVERE wake-up call we are about to receive !
Obama ran on Yes WE can in 2008 and WE voted in the self interest Tax Grumps in 2010!
You cant pay your bills if you quit your job!