Government will go broke weeks earlier than first thought
Treasury Secretary Geithner may want to recalibrate the printing presses. It appears we are going to go broke a couple of weeks earlier than expected unless a new debt ceiling is authorized by Congress.
The U.S. government may default on its debt as soon as Feb. 15, half a month earlier than widely expected, according to a new analysis adding urgency to the debate over how to raise the federal debt ceiling.
The analysis, by the Bipartisan Policy Center, says that the government will be unable to pay all its bills starting sometime between Feb. 15 and March 1.
The government hit the $16.4 trillion statutory debt limit on Dec. 31 , but the Treasury Department is able to undertake a number of accounting schemes to delay when the government runs into funding problems.
The Treasury has said that the accounting schemes, known as "extraordinary measures," ordinarily would forestall default for about the first two months of the year, though officials were clear that they could not pinpoint a precise date because of an unusual amount of uncertainty around federal finances.
"Our numbers show that we have less time to solve this problem than many realize," Steve Bell, senior director of economic policy at the Bipartisan Policy Center, said in a statement. "It will be difficult for Treasury to get beyond the March 1 date in our judgment."
Even after March 1, it is not likely there will be a total government shutdown. Geither can pick and choose which bills to pay, which checks to send out, etc. It's not like Congress refusing to pass a budget, where there is literally no authorized spending. Geithner will be able to spend the revenue that comes in every month, but no more.
While the accelerated date puts a little more pressure on Congress to come to an agreement on spending reductions, it's not likely to matter as much as the sequestration deadline. That's where the real war will be fought.