Treasury Secretary Timothy Geithner sent a letter Wednesday afternoon to policymakers reporting that the United States will hit its $16.4 trillion borrowing limit next Monday December 31. He said that he can take “extraordinary measures” to free up cash on Monday, once the government reaches the $16.4 trillion borrowing cap.
Geithner said he did not know exactly how much time the “extraordinary measures” would buy, given the uncertainty about the expiring tax cuts and automatic spending cuts that make up the “fiscal cliff.” The story was reported in The Hill and other news outlets.
Previously Geithner said he could “free up” about $200 billion dollars which in former times would last about two months. However Geithner said that the uncertainty of the fiscal cliff made it difficult to determine how much cash could be freed up, or how long it would last.
It is assumed that if Congress sends us over the cliff, tax increases would kick in on January 1 as would spending cuts, so there is a possibility that more money could be freed up or it would last longer. However, if the ride over the cliff spooks the markets and consumers, there could be a retraction in the economy that could offset any gains.
The uncertainty is whether a deal will be reached at all and if so, what the deal will entail. The other uncertainty is how long it will take Congress to come to its senses after the ride over the cliff before a new deal is agreed to.
This is not the way Americans expect Congress to govern.
Geithner’s letter was sent after Speaker John Boehner announced that he would not call the House back until the Senate sent him a bill to vote on. He said last week after his own bill failed to garner enough Republican votes to pass that it was now up to the Senate to solve the fiscal cliff.
The problem with Boehner’s statement is the Senate already sent a bill to the House over a month ago. He has refused to bring it up for a vote. The Senate bill made the Bush tax cuts permanent on everyone making under $250,000 a year.
If Boehner were serious, he would bring the Senate bill up for a vote and amend it to his liking. It would then go back to the Senate to concur with changes or go to Conference. Amending the Senate bill would cut 2 or 3 days off the time it would take to send a bill to the President to sign. There are only 5 days left.
His refusal to do allow a vote on the bill before the House shows Boehner is not very serious about solving the fiscal cliff. He, or at least his Conference, is willing to let every American to get hit with a tax increase next week.
President Obama is returning to Washington tonight, and the Senate will return. The Senate already acted. The party that has not acted is the Republican House of Representatives. They are still on vacation.
Already there are signs the public is distressed over this modern day method of governance. Christmas spending was only slightly higher than last year and experts are blaming it on anxiety over the fiscal cliff at least in part.
So this is how life goes at the Tea Plantation.
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