The US has reached its borrowing limit of $16.4 trillion forcing the government to employ “extraordinary measures” to avoid default, US Treasury Secretary Timothy Geithner informed the Congress on Monday.
In a letter to the Congressional leadership, his second in less than a week on the issue, Geithner said the Department of Treasury has begun employing “extraordinary measures to avoid default as it bumps up against the borrowing cap”. The Department of Treasury is beginning a “debt issuance suspension period,” he said.
He said the Treasury has suspended investments in a pair of government retirement funds, a move which is commonly employed by it whenever it reaches the borrowing limit.
Geithner had cautioned the Treasury of these extraordinary measures in a letter on December 26, in which he said that $200 billion in extraordinary measures the government has on hand would normally buy it approximately two months.
“However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures.
“At this time, the extent to which the upcoming tax filing season will be delayed as a result of these unresolved policy questions is also uncertain,” he wrote.
“If left unresolved, the expiring tax provisions and automatic spending cuts as well as the attendant delays in filing of tax returns would have the effect of adding some additional time to the duration of the extraordinary measures.
“Treasury will provide more guidance regarding the expected duration of these measures when the policy outlook becomes clearer,” Geithner said.
