Fiscal Cliff: Everything Is Going To Come Down To March 1st
All this talk of the fiscal cliff is making me dizzy. The good news is, we don’t need to worry about it again for another……2 months. March 1, 2013 is the day that mandatory spending cuts go into effect.
What’s more important though, is that the debt ceiling will also hit on the same day, according to Goldman Sach’s Alec Phillips.
“While the timing is always hard to predict, at this point it appears that the Treasury will exhaust its financing capacity by March 1, when it must make a number of large monthly payments, particularly related to Social Security and Medicare. Congress will need to raise the debt limit by that point if it has not already.
While a failure to raise the debt limit should not have implications for the Treasury’s ability to make interest payments or to redeem existing securities, it could lead to a sharp reduction in spending, including fiscal transfers to individuals, payments to contractors, and payment of tax refunds which tend to be fairly heavy during this period.”
In other words, this is going to go on and on. For now, the treasury department can pay the governments bills with a few accounting tricks, but that can only work for so long.
Wentworth Jones | Elite.