Treasury Secretary Tim Geithner informed congress late yesterday that the Treasury Department will reach the statutory debt ceiling on about Dec. 31. At that point the Treasury will start filling the gap between what Congress had ordered it to spend and the taxes Congress has authorized it to collect via a series of accounting gimmicks whose use has been routinized since Robert Rubin pioneered them in the 1990s.
The real drop-dead point, when Treasury runs out of customary gimmicks and will need to start leaving some bills unpaid, should come sometime in February or March though the details of the fiscal cliff make a difference here.
The key takeaway here should be that the looming fight over the debt ceiling means that any resolution of the fiscal cliff—whether it comes tomorrow or in the second week of January—is only going to be provisional. The White House swears its not going to give any policy ground in exchange for lifting the ceiling this time around, and John Boehner swears he’s going to demand spending concessions. That’s a disagreement that’s much harder to finesse than any of the “cliff” points so it we’ll probably see a months-long slow-motion budget crisis regardless of what happens with the fiscal cliff.