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The Biden administration will act starting on January 19 to reprioritize federal funds in order to put off a debt ceiling crisis until June, Treasury Secretary Janet Yellin told Congress in a letter today. The “extraordinary measures” which should be old hat at Treasury by now from past crises, are intended to prevent the U.S. government from breaching the debt ceiling until, at least, early June.

That would, theoretically, give Congress time to pass legislation raising or suspending the country’s borrowing cap past its current level of $31.4 trillion. Otherwise, the U.S. government would experience a historic default, which Yellen said could cause “irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”

Theoretically, I say, because Republicans and Democrats in Congress already seem to be at loggerheads over a debt ceiling extension. The new Republican majority in the House of Representatives has threatened to hold an extension hostage until Democrats agree to massive cuts to domestic spending. Democrats, who agreed to a deal to raise the debt ceiling in 2011 that constrained domestic spending for a decade, say, Not this time.

On Friday White House press secretary Karine Jean-Pierre told reporters: “We will not be doing any negotiation over the debt ceiling.”

The stakes seem high. In 2021, during an earlier visit to the debt ceiling crisis, Mark Zandi, the chief economist at Moody’s Analytics, said a prolonged crisis could have catalyzed a fully-fledged recession, wiping out billions of dollars in economic growth and eliminating up to 6 million jobs in the United States.

I’d expect the debt ceiling crisis to run right up to the brink–or over it. This is the big chance that Republicans have to recast the Federal budget and I don’t expect them to give it up easily. Democrats, on the other hand, seem more willing this time to let the crisis fall where it may and to blame Republicans for the ensuing chaos.

For investors, who are both spectators and potential victims, there’s plenty of time before the financial markets start to focus on default dangers. Hey, June is 6 months away. But if we get to May without some sign of compromise, I think you can expect to see the crisis begin to move markets for credit and the price of hedges on a drop in bond and stock prices.