Debt Ceiling Facts: Myth 1: If a deal is not reached by August 2, the U.S. will default on its debt. Fact 1: The Treasury Department can prioritize payments in order to avoid a default. The Treasury Department is due to pay off $30 billion in maturing short-term debt. But we also know that the Treasury has the ability to prioritize its payments and pay that particular $30 billion out of the $172 billion it collects in tax revenue. As the Bipartisan Policy Center has calculated, after paying $30 billion in interest payments in August, Treasury could, if it ceased all other functions (see page 13 of this document), also pay for Social Security, Medicare, unemployment benefits, and payments to defense contractors. Technically speaking, there is no need to default in the absence of a debt ceiling agreement.
Posted on: Wed, 09 Oct 2013 01:41:45 +0000
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