The United States will hit its statutory borrowing limit near the end of 2012, just as a new Congress gears up to do battle over the country’s huge debt burden and fiscal deficits.
The country’s current debt is around $16.2 trillion, and continued borrowing needs to finance the budget shortfall will send the government past the fixed $16.39 trillion sometime in the final days of the year.
The limit will be struck between the November 6 presidential and congressional elections and the time when the new Congress is sworn in in early January.
If Republican Mitt Romney defeats President Barack Obama in the White House race, it would also come while Obama serves as a lame duck president before his successor takes office on January 20.
That raises the prospect of a possible political battle spanning both the old, outgoing Congress and a possibly reshaped new legislature, over how to finance the deficit, which hit $1.1 trillion in the fiscal year that just ended.
And it would also come as Republicans and Democrats seek a compromise on an alternative to the “fiscal cliff” crash austerity plan of budget cuts and tax hikes that will be implemented from January 1, threatening to send the country back into recession.
In July 2012 Washington went through a vicious political battle over raising the debt ceiling. In the end, the fight culminated in the poison pill compromise that has become the fiscal cliff trajectory.
Without a timely increase to the ceiling, the Treasury said it would likely be able to take “extraordinary measures” to sustain government spending without adding to the debt into January 2013.
“Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” the department said.
“We continue to expect that these extraordinary measures would provide sufficient ‘headroom’ under the debt limit to allow the government to continue to meet its obligations until early in 2013.”