US Hits Debt Ceiling Dec. 31st; Geithner Sends Letter to Congress

As the country approaches the ‘”fiscal cliff” on January 1st, the U.S. debt limit also reaches it mandatory limit on New Year’s Eve, compounding the nation’s fiscal house of business

This morning the U.S. Department of Treasury released Secretary Timothy Geithner’s letter sent to Congressional leaders yesterday warning that the U.S. debt limit will reach its mandatory ceiling on December 31st.  In an appendix attached, Geithner’s explains the “extraordinary measures” his office will take to create a $200 billion fund in “headroom” to keep the government under the debt limit, allowing the US to meet its legal obligations for about 60 days.

But Geithner’s letter issues a caveat by insisting these measures may not cover all fiscal bases, given the looming fiscal cliff deadlines:  “However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures.”

His letter follows in its entirety:

December 26, 2012

The Honorable Harry Reid

Majority Leader

United States Senate

Washington, DC  20510

Dear Mr. Leader:

I am writing to inform you that the statutory debt limit will be reached on December 31, 2012, and to notify you that the Treasury Department will shortly begin taking certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations.

These extraordinary measures, which are explained in detail in an appendix​ to this letter, can create approximately $200 billion in headroom under the debt limit.  Under normal circumstances, that amount of headroom would last approximately two months. However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures.  At this time, the extent to which the upcoming tax filing season will be delayed as a result of these unresolved policy questions is also uncertain. 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.  Treasury will provide more guidance regarding the expected duration of these measures when the policy outlook becomes clearer.

Sincerely,

Timothy F. Geithner

Identical letter sent to:

The Honorable John A. Boehner, Speaker of the House

The Honorable Nancy Pelosi, House Democratic Leader

The Honorable Mitch McConnell, Senate Republican Leader

cc:  The Honorable Dave Camp, Chairman, House Committee on Ways and Means

The Honorable Sander M. Levin, Ranking Member, House Committee on Ways and Means

The Honorable Max Baucus, Chairman, Senate Committee on Finance

The Honorable Orrin Hatch, Ranking Member, Senate Committee on Finance

All other Members of the 112th Congress

The Senate has reconvened and Majority Leader Harry Reid hopes to send a measure to the House of Representatives that can garner bi-partisan support to avoid the fiscal cliff, not withstanding the possibility that Republican Senator Mitch McConnell could filibuster.  But be prepared to get out your checkbooks fellow taxpayers. Happy New Year America!

Tanya L. Domi is the Deputy Editor of the New Civil Rights Movement blog.  She is also an Adjunct Assistant Professor of International and Public Affairs at Columbia University and teaches human rights in East Central Europe and former Yugoslavia.  Prior to teaching at Columbia, Domi was a nationally recognized LGBT civil rights activist who worked for the National Gay and Lesbian Task Force during the campaign to lift the military ban in the early 1990s. Domi has also worked internationally in a dozen countries on issues related to democratic transitional development, including political and media development, human rights and gender issues.  She is chair of the board of directors for GetEQUAL.  Domi is currently writing a book about the emerging LGBT human rights movement in the Western Balkans.