Treasury Dept. warns Congress about U.S. debt limit, tells staff not to worry about fiscal cliff

Treasury Secretary Timothy Geithner sent a letter to Congress on Wednesday, warning them of the impending debt ceiling limit. This comes on the same day as the release of an internal memo, telling Treasury Department staff not to worry about the fiscal cliff.

In his letter — sent to Speaker of the House John Boehner, House Minority Leader Nancy Pelosi, Senate Minority Leader Mitch McConnell and the rest of Congress — Geithner wrote that the debt limit will be reached on New Year’s Eve.

The Treasury would be taking “certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations,” the letter said.

These measures are expected to provide about $200 billion — or two months — in leeway. With the current economic instability, however, Geithner cautioned that it is impossible to know the exact duration of that breathing room.

Yet as The Weekly Standard reported, a memo signed by Deputy Secretary of the Treasury Neal S. Wolin instructed Treasury employees that the country will most likely not go over the fiscal cliff, since “there is no reason why both sides should not be able to come together and prevent this scenario.”

Should Congress be unable to reach a fiscal cliff agreement, the memo noted that “day-to-day operations” are not expected “to change dramatically on or immediately after January 2, should sequestration occur.” That includes “personnel actions.”

So which is it, Treasury Department? Is the fiscal cliff something to worry about or not?