On Monday President Obama devoted much of the last press conference of his first term to the statutory debt ceiling. The subject will likely attract a great deal of attention in coming weeks.
The U.S. reached the debt limit at the end of the year, but the Treasury Department is undertaking “extraordinary measures” to prevent going over the limit. Treasury Secretary Geithner says the measures will last until sometime between mid-February and the beginning of March. At that point the U.S. must either raise the limit or begin defaulting on some of its obligations because it will not be able to continue borrowing. Read more about the debt limit here and keep track of debt ceiling developments here.
The major credit rating agencies have warned that a downgrade is possible if the U.S. can’t get its fiscal act together. A downgrade would make it more expensive for the U.S. to borrow money.
In a statement, Fix the Debt said the U.S. must raise the debt limit, but must also put in place a plan to address the debt. Fix the Debt’s Maya MacGuineas expressed the same message in a New York Times opinion piece:
Congress should lift the debt ceiling as quickly as possible - no more 11th hour nail-biters please! -- while putting in place a comprehensive plan to bring the debt back down to manageable level.
Until we put a plan in place, the country will continue to go through ordeals like this.