US to hit debt limit early January

The US government will hit its debt limit in the first week of January, the Treasury Department said on Tuesday, as it pointed to an imminent request for $1.2 trillion increase. The government is expected to come within $100 billion of the current $15.2 trillion ceiling by the end of the year, Treasury Department officials said. That effectively puts lawmakers on notice that they will have until mid-January to oppose a fresh increase. But a reprise of the vicious political debates over the debt ceiling that brought the US to the brink of default over the summer is unlikely. Congress agreed on July 31 to immediately increase the national debt by $400 billion, and then increase it in stages after that when necessary. An increase can only be blocked if both the House of Representatives and the Senate pass measures opposing it. In September the Democratic Party-dominated Senate declined to block a $500 billion increase. But the Republican-controlled House nevertheless passed a resolution symbolically rejecting the ceiling rise. With fiscal rectitude looming large as the 2012 election season gets underway in earnest, the new request to hike the borrowing ceiling could sound the starting gun on a fresh political fight. The Treasury Department said it would have to perform some accounting and managerial acrobatics to make sure the US does not miss payments before the raise comes into effect in mid-January. If opposition to the increase is unsuccessful the limit will be raised to around $16.4 trillion. That is expected to put the issue to bed until late 2012. A new rise in the debt ceiling is not expected to be needed until after the general elections in November.