The Fabricated Crisis of the Fiscal Cliff Gets Exposed as Treasury Department Pulls $200 Billion out of a Hat
The political line in the sand that was the so-called fiscal cliff's year-end deadline dissolved on Wednesday as the federal Treasury Department announced it could take "extraordinary measures" to create about $200 billion to keep the government operating for another two months.
As a result, the climax of the political fight to either sunset the Bush-era income tax breaks for the wealthy or face draconian across-the-board federal spending cuts does not have to be resolved in coming days, but can drag on for weeks.
To begin conserving money, Treasury will suspend a program on Friday that helps states and localities manage their borrowing. In subsequent weeks, Treasury will start to tap the federal worker pension fund for additional financial resources. (The pension fund will be made whole once the debt limit impasse is resolved.) Geithner added that the resolution of the fiscal cliff could affect these estimates. In particular, he wrote, “the expiring tax provisions and automatic spending cuts, as well as the attendant delays in filing of tax returns, would have the effect of adding some additional time to the duration of the extraordinary measures.”