While official Washington is focused on potential tax hikes and automatic spending cuts, another fiscal crisis looms on the horizon. A report released Tuesday warned that the federal government is likely to hit a ceiling on issuing new debt come late December and could begin defaulting on obligations by mid-February.
The <a href="http://bipartisanpolicy.org/library/staff-paper/debt-limit">report</a> from the influential Bipartisan Policy Center, a policy think tank, also highlighted why there’s less room for the Treasury Department to maneuver than during last year’s debt-ceiling debacle. The center warned that financial markets may see greater turmoil than in 2011.
The government should hit its $16.394 trillion debt limit during the final week of December, according to the center. The Treasury Department can, as it did in 2011, turn to a number of extraordinary measures to avoid defaulting on the debt it has already issued. The juggling act by Treasury is likely to run out, however, somewhere around mid-February.