By Robert Schroeder, MARKETWATCH
Around this time two years ago, then-Treasury Secretary Timothy Geithner sent Congress a letter saying that the U.S. would be able to take “extraordinary measures” until Aug. 2 to keep paying the country’s bills after it reached the debt limit. President Barack Obama signed legislation lifting the borrowing limit into law on Aug. 2 — but only after a standoff that took the country to the brink of default and later led to the first downgrade of the nation’s credit.
Fast forward two years, and the atmosphere is much calmer as Washington prepares for another of its famously muggy summers. The U.S. bumped up against its $16.4 trillion borrowing limit on May 19, but because of hefty payments to the Treasury by Fannie Mae and Freddie Mac and those extraordinary measures (things like suspending sales of state and local securities), current Treasury chief Jacob Lew says default can be avoided “until after Labor Day.”