U.S. Could Default on Debt as Early as Summer, New Estimate Says

[Zorro]

Source: New York Times

The Bipartisan Policy Center said the nation could run out of cash this summer or early fall if Congress did not raise the debt limit.

The United States faces a default sometime this summer or early fall if Congress does not raise or suspend the debt ceiling, a Washington think tank warned on Wednesday.

The projection from the Bipartisan Policy Center is the latest estimate of when the government could run out of cash to pay its bills. The nation, which borrows huge sums to help pay for everything from military salaries to Social Security benefits, hit its $31.4 trillion borrowing cap on Jan. 19. Since then, the Treasury Department has been employing what are known as extraordinary measures to ensure that the government has enough to pay what it owes, including payments to bondholders.

“We anticipate that those emergency measures, as well as the cash that Treasury has on hand, will most likely be exhausted at some point during the summer or early fall,” Shai Akabas, the center’s director of economic policy, said during a briefing on Wednesday morning.

Last week, the nonpartisan Congressional Budget Office projected that the department’s ability to prevent the United States from defaulting on its debt could be exhausted between July and September. That estimate was slightly more favorable than what Treasury Secretary Janet L. Yellen suggested when she told Congress last month that her department’s ability to keep financing the country’s obligations could be exhausted in June.

Read more: https://www.nytimes.com/2023/02/22/business/economy/us-debt-limit.html?unlocked_article_code=yrGlsf3GKPpJoY1IxIMRhXQpr2-1GqWv48Gcola-JOyocj6d0_CuvT8Y-Tf2bfWZSEUsR-VstD8Bx1EZihYM_tyEis5dI8yhfzK75EYT-HOLCtnxwHeNJS0GoKs_IfOkZhRHHbW4FGWPix47TOjkywVOK1okdXfILZXdF_wrlNV3mkplJezA-qenCwas5Z2Y2qcuPKasAwi76-rBlGdA_1JInu4HyWQn4JI7v-trqGSk9j36ub-DIHC0EXMcQKTZdbchInHLLtb8rlPqmUt591VevF71ILWDEaJrY0MSjurU4LYXE45HrS23CJd2S1VTDijEfZVSCRG2i_ZTPj6eKg&smid=url-share

[ProudMNDemocrat]

1. Congressional Republicans WILL be blamed....

Democrats will make sure of that.

[peppertree]

4. There's the rub: Repugs are utterly convinced that Biden will be blamed

The idea, is to cause a severe recession just in time for the '24 campaign.

Possible runs on banks and grocery stores and all, if they get their way.

They think that this would not only defeat Biden - but give them a lock on the White House, Congress, and most state races for decades to come.

(which, of course, they'd use to impose a one-party state once and for all)

The consequences to the U.S. itself (never mind the world)?

Meh. You make an omelet, you break a few eggs.

[peppertree]

2. The crisis, like the cruelty, IS the point

Republicans have a nice, deep recession - just in time for the '24 campaign.

This might shred global faith in the U.S. dollar?

Meh. You make an omelet, you break a few eggs.

[Bayard]

3. K&R

[LudwigPastorius]

5. Republicans claim that government doesn't work.

...then they get elected and make sure of it.

[Joinfortmill]

6. This is so scary. Where to put your savings?

[melm00se]

7. The debt ceiling shouldn't be the focus

Deficit spending should be.

Since 1970, there have been only 4 years without deficit spending (1998-2001..but the federal debt did increase).

https://www.presidency.ucsb.edu/statistics/data/federal-budget-receipts-and-outlays
https://www.thebalancemoney.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287

We can quibble about the debt ceiling but it might not be a problem if the feds either figured out how to spend less or collect more (and not spend that surplus).

[pfitz59]

8. GOP idiots want to spark a revolution?

It will backfire. If the Government checks stop, the recipients will turn on Congress.