Financial markets around the world are celebrating the climactic New Year's agreement to avert scheduled tax increases and budget cuts in the United States. But the party could be a short one.
While Congress' action ended a stubborn stalemate and prevented the nation from going over a "fiscal cliff" and possibly tumbling back into recession, the terms of the bipartisan pact helped erect an even larger fiscal precipice.
The deal, which President Barack Obama plans to sign quickly, blocked big income tax increases on most Americans. But it extended the deadline for deep mandatory spending cuts for only two months. And it did nothing to deal with raising the nation's borrowing limit, despite Obama's request.
The debt limit, set by Congress, is now $14.3 trillion — a ceiling the government officially hit on Monday.
The Treasury Department says it will take "extraordinary measures" to keep paying the government's bills — but only until sometime in February or March.
After a summer 2011 fight over raising the debt limit, the government came close to defaulting for the first time ever and credit rating agency Standard & Poor's yanked the nation's blue-chip AAA bond rating.
Before returning to Hawaii for vacation, Obama dug in his heels and warned Republicans against using a vote on the debt ceiling to try to win concessions on spending cuts.