The debt ceiling has largely taken a backseat to the looming fiscal changes that are scheduled to take effect on Dec. 31. But unless it’s dealt with in the lame duck Congress, we’re going to hit another debt limit come February 2013, according a new analysis by the Bipartisan Policy Center.
That means that Congress and the White House could be forced to come to a significant deficit agreement before February, even if they simply decide to extend all the tax cuts and suspend the sequester before the new year. Otherwise, the debt ceiling could not only threaten the markets but also cost the government even more than it’s already spending.
The Bipartisan Policy Centerpredicts that we’ll actually reach the debt limit the last week of December, but the Treasury can use so-called “extraordinary measures” to buy the country some more time. It could, for instance, raise more cash by temporarily divesting from government bonds for government employees’ retirement savings, among other measures to reduce the debt for a short period of time. Altogether, the center believes that the government could raise $197 billion through such measures, which would be enough to stave off the debt limit until February 2013.