By Jim Puzzanghera
December 26, 2012, 2:22 p.m.
WASHINGTON — The federal government will begin taking special steps this week to continue paying its bills as the nation prepares to hit its debt limit next week, Treasury Secretary Timothy F. Geithner said Wednesday.
In a letter to congressional leaders, Geithner said the U.S. would reach its $16.4 trillion debt limit on Monday.
To prevent the U.S. from defaulting on its obligations, the Treasury will begin a series of what it called “extraordinary measures” to juggle the federal government’s finances to give Congress a few more weeks to increase the limit.
One of the first steps will start Friday when the Treasury plans to suspend sales of state and local government series Treasury securities, which count against the debt limit.
Geithner said that the measures normally would free up about $200 billion in additional borrowing authority, meaning the debt limit would not actually be hit for about two more months.
But given the “significant uncertainty” revolving around the fiscal cliff, Geithner warned that “it is not possible to predict the effective duration of these measures.”
For example, if there is no fiscal cliff deal and taxes go up and spending cuts begin on Jan. 1, officials might have more time to raise the debt ceiling because the government would be spending less and bringing in more tax revenue.
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