Treasury Dept. Has Limited Choices For Payments If Debt Ceiling Isn’t Raised
Bloomberg Government is out with a very cool interactive tool listing all the invoices that will be due after August 2nd, and you’ve got the job of coming up with what you’d be willing to pay for.
Here’s how I managed:
Paid:
- Interest on National Debt —- $29.0 Billion
- Social Security Benefits — $49.2 Billion
- Defense Vendor Payments — $ 31.7 Billion
- Medicare — $28.6 Billion
- Medicaid — $21.4 Billion
- Energy Department — $3.5 Billion
- Veterans Benefits — $2.9 Billion
- Active Duty Military Pay — $2.9 Billion
- Justice Department — $1.4 Billion
- Federal Aviation Administration — $700 Million
- Centers For Disease Control and Prevention — $500 Milion
- Small Business Administration —- $300 Million
This was left unpaid:
- Other, Unclassified Spending — $42.0 Billion
- Department of Education — $20.2 Billion
- Federal Salaries and Benefits — $14.2 Billion
- Unemployment Benefits — $12.8 Billion
- Health And Human Services Grants — $8.1 Billion
- Food and nutrition service/Food Stamps — $7.1 Billion
- Department of Housing and Urban Development — $6.7 Billion
- Federal Highway Administration — $4.5 Billion
- IRS Tax Refunds — $3.9 Billion
- Temporary Assistance for Needy Families $2.2 Billion
- NASA — $1.5 Billion
- Labor Department — $1.3 Billion
- Federal Transit Administration $1.3 Billion
- Agency for International Development — $1.0 Billion
- EPA — $900 Million
- Dept. Of Homeland Security Emergency Preparedness and Response — $700 Million
And that was just for one month. Try it yourself, see how you do.
This is a perfect example of the problem being faced. That $20.2 billion is not just running the department. My understanding is that much of that funding is going out to Schools to help pay for things like special education programs and other federal mandates. That’s only exaserbated by the fact that August is the month when most school districts are ramping up fo the new year.
So many of these have cascade effects.
Nonsense. Michelle Bachmann says Obama is lying. There will be no problem if the debt ceiling isn’t raised. Stop trying to scare people.
On the serious side…Homeland Security…isn’t that FEMA? Didn’t hurricane season just start?
I’d actually go with a slightly different strategy and not fund the following 4 items:
Social Security Benefits — $49.2 Billion
Defense Vendor Payments — $ 31.7 Billion
Other, Unclassified Spending — $42.0 Billion
Federal Salaries and Benefits — $14.2 Billion
Everything else can be funded, but the few skipped areas are painful enough Congress is motivated to raise the debt ceiling.
@David M:
Not going to say that you made wrong choices because these are all policy choices but, you are aware of the political cost that would be paid for not paying most of those I assume?
Just pay every other month! The $38 billion not spent can then be used for tax cuts!
@hey norm:
I’m pretty certain than a number of GOP presidential hopefuls are wishing for a default and the effects of it, since that will kill Bachmann’s chances.
The only fair, non-partisan way to decide spending priorities is via a televised lottery drawing. Every month, Obama and Eric Cantor can take turns drawing slips of paper from a basket with the names and costs of programs that are to be funded, until the nation’s monthly allowance is used up.
@Doug Mataconis: I’m pretty sure people in both parties would consider the political consequences of missing those payments to be unthinkable, and would permanently eliminate the debt ceiling to avoid ever skipping them. I don’t think much else would have as severe of political consequences as missing Social Security or Defense Vendor payments (short of not funding anything in the military).
@David M:
One problem with withholding Defense vendor payments is that they, having signed contract, have the ability to sue if not paid.
Isn’t that the current interest payment and not the greatly increased one we face as soon as Moody’s cuts our rating (which they said happens when we go into even technical default, i.e. Aug 2)?
I notice you would choose not to fund Federal Salaries and Benefits. Who would administer all those social security payments, defense vendor payments, Medicare and Medicaid, the VA, the energy department, the CDC, the FAA, and Justice? Volunteers?
I don’t think it will happen, but it would be a mess. Neither the human departments nor the computer systems in place would be adaptable. Neither is programmed for this.
(Think economic Katrina)
@Stormy Dragon: That’s what I’ve been wondering, is the fact that some items are formal contractual obligations (interest payments, military contracts, employment contracts, etc.) make them a higher priority than non-contractual obligations (SS for example)?
The problem with not paying contractual obligations is that, while not technically a default, it does tell investors two things:
1) We don’t have the money to pay for everything that we committed to paying for
and, more importantly:
2) Our politicians are perfectly willing to not pay them if it’ll help their election chances.
Both of which are adequate reasons to reduce our national credit rating.