Crisis Real For August 2 Debt Deadline
Tough decisions will have to be
made if borrowing limit isn't boosted.
By TOM RAUM
THE Associated Press
Published: Saturday, July 16, 2011 at 1:19
a.m.
WASHINGTON |
Horror stories are flying about the damage that might be wreaked should
Congress and President Barack Obama
fail to cut a deal by the Aug. 2 deadline to increase America's borrowing limit.
Nearly every American is in harm's way, either directly or indirectly.
Absent a deal by then, the government would find itself tight on cash and
unable to borrow — and have to start deciding which of the 80 million bills due
in August it should pay and which it should put off.
Tough decisions would come immediately: On Aug. 3, some $23 billion in
Social Security benefit payments are due to be processed. On Aug. 4, the
Treasury Department must pay $87 billion to investors to redeem maturing
Treasury securities. On Aug. 15, more than $30 billion in interest payments
come due.
In addition to those costs, the government normally pays $5 billion to
$10 billion daily to defense contractors, Medicare providers, federal employees
and others.
Obama has said he can't guarantee Social Security checks and
payments to veterans and the disabled will go out on schedule in the absence of
a deal. He could be challenged on that, however, because some legal and
congressional budget experts question whether he can unilaterally decline to
pay Social Security benefits if there are still assets in the program's trust
fund.
Regardless of how that issue is resolved, there's no question that
government services, programs and benefits could take an enormous hit.
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