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Treasury to Begin “Extraordinary Measures” to Delay Default

December 28, 2012—In a Dec. 26 letter to congressional leaders, Treasury Secretary Timothy Geithner reports that the U.S. government will reach the statutory limit of its borrowing authority on Dec. 31 and “will shortly begin taking certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations.”

The letter states that the measures, detailed in an appendix to the letter, “can create approximately $200 billion in headroom under the debt limit. Under normal circumstances, that amount of headroom would last approximately two month.”

Geithner warns, “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. 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.”

The need to raise the debt limit precipitated the August 2011 budget agreement that resulted in the pending across-the-board spending cuts that make up part of the so-called “fiscal cliff.”  House Speaker John Boehner (R-Ohio) repeatedly has demanded additional spending cuts at least equal to any further increase in the debt limit, but President Obama has said he will not “play that game.”


Dave Moore
Senior Director, Government Relations
Telephone: 202-828-0559


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Jason Kleinman
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Telephone: 202-903-0806