Washington, D.C. – The following is a statement by Steve Bell, Senior Director of the Economic Policy Project at the Bipartisan Policy Center:
“This afternoon’s announcement by the Treasury Department that it will begin ‘extraordinary measures’ in order to pay the nation’s debt obligations stands as a stark warning that the nation’s fiscal policies continue to worsen. The latest Bipartisan Policy Center debt ceiling analysis, which was released in November, predicted that the debt limit would be hit during the last week of December, which was confirmed byTreasury Secretary Timothy Geithner today.
“As our analysis pointed out, the ‘extraordinary measures’ announced today will give the government fewer days of relief than similar measures did last year after the debt limit was reached, meaning a shorter period that the government can continue to pay its debts on time and in full.
“The inability of the president and Congress to reach an agreement on a deal to avoid the looming fiscal cliff does not bode well for an accelerated bipartisan resolution to the debt limit issue. Furthermore, it seems likely that negotiations involving the alternative minimum tax, existing tax rates, and a variety of other tax and spending items will make a precise prediction of the expiration of Treasury’s ability to pay the nation’s debt very difficult. However, under assumptions that we at the Bipartisan Policy Center have made, we continue to believe that the most likely date for full exhaustion of Treasury’s resources will be in February 2013.
“In the coming weeks, we plan to release the second part of our debt limit report, which will more closely examine extraordinary measures and what happens day-to-day once they are exhausted.”