Debt Limit Hit on New Year’s Eve!
Today is the day.
The federal government debt limit ceiling will be reached by end-of-business today.
A huge $100-$200 billion Treasury bond payout happens on the last business day of every calendar year. It will put us over the top.
The payout was $167 billion on December 31st of 2009, $154 billion in 2010 and $98 billion in 2011. In an improving economy, it’ll probably be around $90 billion today.
The U.S. was $56 billion under the limit at last reporting by the U.S. Treasury Department on December 27th.
The bad news is that right off the bat we will have already spent about $35 billion of the $200 billion or so in “extraordinary measure” reserves the Treasury has to stave off default before the clock even starts ticking. That will leave only about $165 billion left of the reserve to work with.
That means the number of days before default will far fewer than the 78 days there were in 2011 in the last contentious debate.
Brought on by the failed fiscal cliff negotiations, though it seems hardly possible, the fight over raising the debt ceiling will be even more contentious than before.
The debt hawks will out in force… and they should be.
That fight will happen regardless of what the Congress does, if anything, today.