Its Official: Debt Ceiling Obliterated!
It was forecast in mid-December by U.S. Treasury Secretary Timothy Geithner. It became official today with the newest Treasury Department debt-to-the-penny report.
The sanctioned $16.394 trillion debt ceiling limit was blasted to bits on December 31st when the national debt leaped to $16.433 trillion.
The national debt exceeds the official limit because certain expenses are exempt from the debt ceiling. All those exempted funds were used up to. There could have been billions more taken out the $200 billion “extraordinary measures” fund to make up for other shortcomings. We don’t how much more was needed that day, if any. That isn’t reported, and won’t be.
From this time forward, we will not know how much of the emergency funds have been spent until we get close to “default day”.
In 2011 that took 78 calendar days after the limit was reached. And every single one of those days were used up before the Congress finally acted at around midnight… sound familiar?
These guys just never learn!
This time, though, there will be fewer than 78 days before “default day” arrives.
There are several reasons for that:
- A large balloon interest payout on December 31st, 2012
- There are fewer funds to draw from this time of year
- Early tax refund filings will cost the Treasury more
Ironically, the fiscal cliff deal just approved will hasten the arrival of “default day”. Now that the tax structure has been decided, people will soon be able to start filing for coveted refunds.
Taxpayers will be especially motivated to file for refunds early this year since they will see a 2.1% decrease in their paychecks because of the fiscal cliff deal.
The U.S. national debt rose $96 billion on December 31st, 2012; the same day as Vice President Joe Biden and Senate Minority Leader Mitch McConnell were hashing out the fiscal cliff deal.
A sad coincidence is that the fiscal cliff deal added another $96 billion in new, mostly unfunded spending itself.
Today’s Treasury report got lost in a wild day of celebration over the fiscal cliff deal. The celebration covered over the rotten apple beneath it.
Let the debt debates begin… the clock is ticking!