In a letter to congress, Treasury Secretary Tim Geithner claims that government borrowing will hit the debt ceiling on Monday. Scary stuff.
According to Geithner, the Treasury Department will have to engage in “extraordinary measures” to prevent government from exceeding the $16.394 trillion debt ceiling. He claims that he can create around $200 billion of head room – or two months of spending. To avoid the cliff, the Treasury will suspend sales of certain state and local Treasury securities and begin tapping into worker pension funds.
So Washington will pretend to live within its means for two months. Extraordinary, indeed. If it weren’t for the threat of default caused by the political turmoil surrounding the fiscal cliff and debt ceiling debates, this might even be good news. But in today’s world, Washington acts as if a debt ceiling, rather than debt itself, is the nation’s problem. There has not been a single plan floated during this fiscal cliff negotiations that would have genuinely slowed runaway spending.
If a person was skeptical, they might also question the timing of the letter. They may wonder if the “extraordinary measures” undertaken by the Obama Administration will be used to cut programs that allow the president to exert maximum political pressure on Republicans to surrender and pass his trillion-dollar redistribution fee. It was reported earlier today that Senate Democrats were trying to ferret out votes for a plan that would raise taxes on all incomes over the $250,000 threshold. Once passed, they hope to entice around 30 or more Republicans to pass it in the House.