U.S. Department of Treasury Secretary Timothy Geithner wrote a letter to Congress Wednesday stating the government is expected to hit its statutory debt ceiling on Monday, Dec. 31.
To avoid a default, Geithner said he will take "extraordinary measures" to create about $200 billion worth of headroom under the debit limit, which will postpone a default for about two months.
"However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures," Geithner said.
The letter also urges talks between President Obama and Congress on a deficit-reduction plan before the looming fiscal cliff reaches its year-end deadline.
"If left unresolved, 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," Geithner said.
Compass Point Research & Trading said it’s still possible for Congress and the president to work something out to avoid sweeping tax increases and spending cuts all at once.
The housing sector has been watching Congress closely with the mortgage interest deduction still a concern and tax cuts threatening a housing recovery.