Government may run out of money weeks earlier than expected
The United States will no longer be able to pay all its bills sometime between Feb. 15 and March 1, a new analysis from the Bipartisan Policy Center says.
"Our numbers show that we have less time to solve this problem than many realize," said Steve Bell, senior director of BPC's Economic Policy Project, in a Jan. 7 release.
The factors that will decide the actual date include the strength of the economy, which determines the amount of tax revenue the government brings in, and the timing of tax filings and refunds. The government hit its legal debt limit on Dec. 31 and has since relied on extraordinary measures to fund its obligations and operations.
If the Treasury runs out of money, the BPC analysis (.pdf) says it might either choose which bills to pay or pay entire days' worth of bills at a time once enough cash is available.
The first scenario is unprecedented, and its legality is unclear, the BPC says. The design of the Treasury's computer systems also might not allow for it.
And if Treasury did attempt to pay its bills selectively--BPC says it could afford 60 percent of what it owes from Feb. 15 to March 15--it would have to sort through more than 100 million monthly payments.
For that month, BPC says, the Treasury could afford to pay the interest on its debt, tax refunds for individuals, Medicare and Medicaid payments, social security benefits, military pay and retirement, and unemployment benefits. But in that case, the government wouldn't be able to pay its defense vendors, veterans benefits, federal salaries and benefits, or food stamps--or anything else.
BPC's cash flow analysis estimates that on Feb. 15 alone, the Treasury will bring in $9 billion in revenue and owe $52 billion in spending, including $30 billion in interest on the national debt.
The report also predicts chaos and public uproar would ensue if Treasury ends up deciding which of its obligations to continue to fund.
- download the report, "Debt Limit Analysis" (.pdf)