Uncle Sam’s sorry day of reckoning By JAMES PETHOUKIS

Never mind New Year’s Eve — Monday is Debt Ceiling Day! According to the best guesstimate by Treasury Secretary Timothy Geithner, the federal government on Monday will reach its statutory borrowing limit of $16.4 trillion — or roughly 104 percent of America’s total economic output.

A legal limit on federal debt was first enacted during World War I and has been increased 13 times since 1995. The most recent increase came after a major political battle in the summer of 2011 — a conflict that also led Standard & Poor’s to strip the United States of its AAA credit rating.

Now we’re back up against it again, thanks to a year when Uncle Sam spent more than $1.3 trillion more than he took in.

Don’t worry, it won’t be Debt Default Eve. Treasury’s bean-counters still have a few tricks up their sleeves. With some clever financial futzing, Geithner says his department can “temporarily postpone the date that the United States would otherwise default on its legal obligations.”

He reckons Treasury can probably squeeze out another two months and $200 billion through moves such as suspending payments into the government-employee pension fund, dipping into a special fund infrequently used to stabilize the dollar or even selling off the nation’s gold reserves.

But then what? March madness in the financial markets if Democrats and Republicans can’t agree to raise the ceiling, perhaps in the current round of fiscal-cliff talks?

Certainly it would be very bad if the US missed a debt payment. Last year, Geithner said a default would “inflict catastrophic, far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment.”

True enough, but that isn’t the real risk here —

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Comments

  1. Timothy,

    To create more available cash, like the man in a leaky rowboat, you have to plug the holes. The moves you say you can make are not the moves a provident man would make and you know this as fact and yet, because you serve a totally irresponsible idiot, you come up with off-the-wall ideas that should never be placed on the runway, let alone allowed to fly. Between your inane thinking and Obama’s need to crush our American Spirit, it is time for you to go away…anywhere….just be sure that you are never able to play plumber with the nation’s leaking economy – an economy made worse by your totally inept moves.

    By the way, Tim, since you boast of your financial magic and, indeed, have used some of your ‘ magic ‘ on America, I have a couple hundred dollar bills carefully hidden away. If I send them to you, and let you weave your magic, in how many days will I have a thousand….a hundred thousand….and will I be up to a million by the end of 2013 ? That’s the kind of thing you promise Obama and I’d like to get in on the action. Heck, if my broker charges 1.5 %, I’ll be willing to pay you 2.4 % after I see the results and that should be a snap for a man like you.

    When do we start ?

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