WASHINGTON (AP) — The political fight that took the nation to the verge of defaulting on its debts last year is back, overshadowed by "fiscal cliff" disputes but with consequences far graver than looming tax hikes and steep spending cuts.
The government is on track to hit its $16.4 trillion borrowing limit this month. And while the Treasury can keep the government functioning through early next year, President Barack Obama is insisting that any deal on the fiscal cliff include an end to brinkmanship on the debt ceiling.
Obama is demanding tax rate hikes on the rich, using the prospect of a worse alternative and the momentum of his re-election as leverage. But the debt ceiling gives Republicans a powerful weapon to extract further deficit reduction too, contributing to the current stalemate.