The Tax Policy Center predicted yesterday that President Obama’s opponents will take advantage of uncertainty about the exact timing of an expected debt default to criticize the administration anew when Friday dawns with no sign of an apparent crisis.
The TPC said:
“his [Obama's] critics will note with some glee that the sun still rose on Friday morning and Treasury still paid its bills. So, they’ll ask, what’s the rush?”
The US Treasury can accurately project the amount of its expected daily spending, the TPC explained. However, the Treasury will be relying on an unpredictable and unsteady stream of money coming in to pay its bills. Because of this:
They [the Treasury] are less adept at projecting day-to-day revenues, which can vary quite a lot.
Let the tea partiers bark at the moon like the rabid dogs they are.
A letter Treasury Secretary Jacob Lew sent to Congress on October 1 is the source of confusion about the so-called drop dead date of October 17. In the letter, Lew looked to the 17th as the date when he expected that funds available through extraordinary measures would be exhausted. That’s not the same thing as default but the date was picked up by the media which hammered on it as the last chance to do or die.
“It is important to note that once the final extraordinary measures are exhausted, no later than October 17, we will be left to meet our country’s commitments at that time with only approximately $30 billion. This amount would be far short of net expenditures on certain days, which can be as high as $60 billion.”
In reality, no one can say for sure when actual default may occur. Most economists agree that default is inevitable in November unless Congress extends the government’s borrowing authority. Their predictions are based on November revenue amounts in prior years. As luck would have it, the incoming revenue stream is strongest in April of each year and it dries up somewhat during October and November. Since spending remains relatively constant from month to month, a deficit spike shows up in November. On average, February is the only month when bigger deficits have occurred.
Over the last 3 years budget shortfalls averaged $150 billion each November. Even half that amount would be a serious breach of the government’s obligations.
The table below lists the major items that are considered mandatory for payment. The $58 billion in payments on November 1 is the first major challenge that may result in a payment delay . It’s important to understand that even after these payments totaling $122 billion are made, another $178 billion in government obligations are expected including $50 billion for Defense.
Date |
Payment |
Amount |
10/23/2013 |
Social Security Benefits |
$12 billion |
10/28/2013 |
Federal Employee Salaries |
$3 billion |
10/30/2013 |
Medicaid Payments to Providers |
$2 billion |
10/31/2013 |
Interest on public debt |
$6 billion |
11/1/2013 |
Social Security Benefits |
$25 billion |
11/1/2013 |
Military Active Pay, retirement, & veterans benefits |
$12 billion |
11/1/2013 |
Supplemental Security Income benefit |
$3 billion |
11/1/2013 |
Medicaid Payments to Providers & Private Plans |
$18 billion |
11/14/2013 |
Social Security Benefits |
$12 billion |
11/15/2013 |
Interest on public debt |
$29 billion |
Even without default, the tea party Bolsheviks will have the satisfaction of making it almost impossible for the government to function. As news comes out about the many obligations that can't be paid, the scoundrels who created this mess will be quick to blame the President.
It would be prudent to announce an immediate troop withdrawal from Afghanistan right away which would provide substantial savings in Overseas Contingency Operations. It should be a constant reminder that Republicans ran up the debt only to create the conditions for default. Likewise, they started a war overseas only to pull the rug out from under its funding.
Let the tea partiers bark at the moon like the rabid dogs they are.