(Photo: REUTERS/Benjamin Myers)
The U.S. government will go over its debt limit on Monday, Treasury Secretary Timothy Geithner announced Wednesday. "Extraordinary measures" will be used to keep the nation from defaulting on promised payments for about two months.
The announcement came in a letter to congressional leaders.
The "extraordinary measures" will provide about $200 billion of "headroom," Geithner wrote, but the amount of time that will buy will depend much on what lawmakers do with regard to the "fiscal cliff."
"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," Geithner explained.
The Senate is planning to vote on a bill Thursday that would delay much of the fiscal cliff. Delaying the tax increases and spending cuts would, though, mean less revenue going to the treasury and no reduction in spending for the treasury. If the Senate bill, or a similar measure, were passed, Geithner noted, it would mean that the extraordinary measures would last less than two months.
Republicans in control of the House of Representatives have said that they will not support an increase to the debt limit without spending cuts equal to or greater than the amount of the debt limit increase.
The fiscal cliff was caused, in part, by the last political fight over increasing the nation's debt limit in the summer of 2011. As part of those negotiations, the Budget Control Act was passed. Since Congress failed to agree to a "grand bargain" deficit reduction package, that law requires automatic spending cuts to begin going into effect on Tuesday.
Geithner noted that he will update congressional leaders on the duration of the extraordinary measures "when the policy outlook becomes clearer."
The national debt is now over $16.4 trillion, and there are over $122 trillion in unfunded liabilities.