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Thomas Kenny

The Next Crisis: U.S. to Exceed Debt Ceiling on Dec. 31

By December 26, 2012

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As if the fiscal cliff weren't enough to worry about, investors are beginning to realize that the United States is on the verge of exceeding the debt limit mandated by Congress. Recall that in August, 2011, the government reached its borrowing limit (then $14.29 trillion), prompting an intense debate that roiled the financial markets, sparked concerns that the country would default on its debt, and ultimately led the rating agency Standard & Poor's to downgrade the United States' AAA rating. On Wednesday, Treasury Secretary Timothy Geithner announced that government will again its debt limit - now $16.4 trillion - on December 31. While the Treasury can forestall a crisis via stop-gap measures for as long as two months, the implication is clear: unless Congress acts soon, we could be in for a repeat for the market volatility of 2011.

Learn more: What is the debt ceiling?

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