Here’s Another Fiscal Puzzle for Congress to Solve

The United States government will reach the $16.4 trillion federal debt limit on December 31, the Treasury Department stated on Wednesday. As Treasury secretary Timothy F. Geithner said in a letter to senior lawmakers, seen by the Washington Post, the department will be forced to take “extraordinary measures” to enable the U.S. to continue borrowing and forestall default.

With the additional $200 billion in additional funding secured by the Treasury Department, Congress can afford two months of deliberations before it must raise the debt limit, or the United States will default on its debt.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Part of Geithner’s “extraordinary measures” consist of cost-cutting measures; on Friday, the Treasury will suspend a government program that helps states and localities manage their borrowing. However, the Treasury will secure additional funds from the federal worker pension fund, which will be repaid once the debt limit deadlock is resolved.

But the fiscal cliff – the automatic spending cuts and tax increases scheduled to begin January 1 – could complicate debt limit negotiations. Geithner wrote in his letter that these “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.”

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.