The New York Times
Jan. 2, 2013
Even as President Obama prepares to sign the hard-won tax deal that Congress passed Tuesday, another manufactured deadline with a colorful name is threatening to hamstring the government and undermine the economy.
Goodbye, fiscal cliff. Hello, debt ceiling.
The federal government has exhausted its legal authority to borrow money, and in about two months it will no longer have enough cash to meet all of its obligations, the Treasury Department said Monday...
While it remains difficult to imagine that the federal government would default on its obligations, doubts may grow as the deadline approaches, and the cost of that uncertainty could be significant. The belief that lending money to the United States government is virtually risk-free is a basic tenet of the global financial system. The risks of other investments are measured by comparison, and priced accordingly.
Doubts also could cost the government directly. The scale of federal borrowing means that even small increases in the interest rates that the government pays to investors add billions to the federal debt. The slightly higher rates on debt issued during the last debt ceiling standoff, in 2011, will cost taxpayers about $18.9 billion in additional interest payments, according to the Bipartisan Policy Center.
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Economic Policy Project