The Washington Post
Jan. 7, 2013
Want to make sure your calendar is clear when we hit the debt ceiling? Then don’t schedule anything between Feb. 15 and March 1.
That, according to a new analysis by the Bipartisan Policy Center, is the likely range for debt-ceiling doomsday: The day when the Treasury Department runs out of room to maneuver and we actually begin to default on obligations. Either Congress figures out the debt ceiling before that date or things get very bad, very fast.
Imagine we hit the debt ceiling Feb. 15. The BPC’s analysis suggests that federal spending over the next month will be about $450 billion. Federal revenues will be nearer to $277 billion. That means that the government will have to default on about 40 percent of its obligations.
The choices it will face quickly become stark. It can cover interest on the debt, Social Security, Medicare, Medicaid, defense spending, education, food stamps and other low-income transfers, and a handful of other programs, but doing all that will mean defaulting on everything — really, everything — else. The FBI will shut down. The people responsible for tracking down loose nukes will lose their jobs. The prisons won’t operate. The biomedical researchers won’t be funded. The court system will close its doors. The tax refunds won’t go out. The Federal Aviation Administration will go offline. The parks will close. Food safety inspections will cease.
Read the full blog post here
Economic Policy Project