An old dispute has become the newest issue in the fiscal cliff debate: The debt ceiling.
Treasury Secretary Timothy Geithner has notified Congress that the nation technically hits its $16.394 trillion debt ceiling on Monday, but his department can take “extraordinary measures” to keep paying the bills for another few months.
The letter raises the prospect of a rerun of the 2011 battle between congressional Republicans and the Obama administration. The GOP’s refusal to raise the debt ceiling without more budget reductions nearly led to a U.S. default, and contributed to a downgrade of the U.S. credit rating.
Hitting the debt ceiling also injects another factor into talks to avoid the so-called fiscal cliff, a series of tax hikes and budget cuts scheduled to kick in if there is no new debt reduction deal between the White House and Congress.
Obama and the Democrats are seeking an increase in the debt ceiling as part of any agreement. The president, who spent Christmas in Hawaii, returns to the White House on Thursday to deal with the fiscal cliff.
Some Republicans say the debt ceiling should be taken up separately, calling the issue a way to restrain spending.
Even if the parties reach a deal in the next week to avoid the fiscal cliff, it is likely that the debt ceiling will remain a source of dispute — again.