Debt Limit Analysis | Bipartisan Policy Center

bipartisanpolicy.org ^ | June 27, 2011 | Jay Powell

[smokingfrog]

The purpose of this analysis is to shed light on the operation of the debt limit in case Congress does not raise the limit before the federal government runs short of cash and is no longer able to meet all of its obligations.

In particular, we have addressed three questions:

1. What is the date past which the government will be unable to honor all obligations?
2. If that date is passed without a debt limit increase, what will be the effect on federal spending?
3. If that date is passed without a debt limit increase, what are the potential consequences in the market for Treasury securities, as well as in other markets and in the broader economy?

The attached analysis has been updated.

Try It Yourself

The federal government has an estimated $306.7 billion in payment obligations for August 2011 after the 2nd of the month. The U.S. will take in $172.4 billion in revenue from August 3 to 31, 2011. Check out the following tools to make the difficult choices that would prioritize programs and balance the books:

• Bloomberg Government's Debt-Limit Bubble tool
• PBS NewsHour's Daily U.S. Government Income and Expenditures tool

News

• Read the press release here.

• Read "Real implications of debt debate" by Jay Powell in POLITICO.
• Read "Nation in fiscal crisis faces only tough choices" by Jay Powell and Steve Bell in The Hill.

• Watch Jay Powell's recent television interviews here.

Attached files

• Download the full methodology here (237.22KB PDF)
• Download the full analysis here (1.56MB PDF)

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[smokingfrog]

Haven't read all the details. Just putting it out there.

[TomasUSMC]

So we would have to make 44 percent across the board cuts to meet the Debt Ceiling. Good FREEZE THE DAMN DEBT CEILING.

[Kellis91789]

No, across the board cuts are unnecessary. It is easy to pay for everything of any value and come in under the $172B the article claims we’ll have in revenue. I paid for everything except welfare and Federal employee salaries, Unemployment Benefits, Foodstamps, Department of Education, Department of Energy, International Aid, and “Other” — shut down all that junk — and it only required $167B.

I still paid the interest payments, SS, Medicare, FAA, Federal Highway Admin, IRS Refunds owed, etc.

Play with the second linked “tool” and you’ll see how easy it is to pay for the things we actually care about.