The borrowing limit of the US will be hit by the end of the year although emergency measures will enable the government to continue functioning into the first quarter of 2013.
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Last year, Congress raised the debt limit by $2.4 trillion to $16.39 trillion. But disagreements over the deficit caused Congress to have to pay additional costs that caused S&P to cut the US credit rating for the first time in history.
An effort to raise the debt ceiling will begin after the November 6 elections. The government has been scrambling to make up the difference between federal spending and revenues. The negotiations will be part of broader discussions surrounding the fiscal cliff that may result if current tax laws are allowed to expire.
The Treasury has a committee of private-sector advisors that says the fiscal cliff presents grave economic risks. The Treasury Borrowing Advisory Committee says an orderly resolution to the issue would be supportive to the economic recovery.
Many analysts have said that the fiscal cliff could throw the economy back into recession if at least partial extensions of current laws are not put into place.
At this point, the Treasury intends to keep its issuance of notes and bonds stable based on the belief that the current issuance schedule is adequate to meet the borrowing needs
forecast over the near term.