Like a corporate CFO trying to make plans with the fiscal cliff in sight, U.S. Treasury Secretary Timothy Geithner is unsure how long the financial arrows in his quiver will prove useful.
Nevertheless, the U.S. Treasury Dept. will soon start taking “certain extraordinary measures” to temporarily postpone the December 31, 2012, deadline after which the United States would otherwise default on its legal debt obligations, Geithner wrote congressional leaders today. The four measures can create “about $200 billion in headroom under the debt limit,” he wrote. “Under normal circumstances, that amount of headroom would last approximately two months.”
But given “the significant uncertainty that now exists” regarding 2013, it’s impossible to forecast how long these measures will remain effective. That uncertainty, of course, stems from the package of draconian spending cuts and tax hikes set to take effect if Congress fails to act by the end of the year.
Under current conditions, how long the upcoming tax-filing season will be delayed as a result of these uncertainties “is also uncertain,” the Secretary 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.”
The Treasury Dept. “will provide more guidance regarding the expected duration of these measures when the policy outlook becomes clearer,” Geithner added.
The measures include suspending sales of State and Local Government Series Treasury securities and determining that a “debt issuance suspension period” exists, which permits the redemption of existing and the suspension of new investments of the Civil Service Retirement and Disability Fund and the Postal Service Retirees Health Benefit Fund.
The two other measures are suspending reinvestment of the Government Securities Investment Fund and suspending reinvestment of the Exchange Stabilization Fund.