Posted on 05/24/2023 7:19:33 PM PDT by 11th_VA
Government contractors should prepare now for the U.S. to default on its debt, which would result in halted payments among other challenges.
Government contractors will likely face a tough road ahead as Congress and the Biden administration navigate whether to raise the U.S. debt ceiling to avoid an economic crisis.
If the $31.4 trillion debt ceiling isn't raised by June 1, the U.S. Department of Treasury won't have enough cash to pay all of its bills. It would then likely focus on maintaining its payments on the debt interest to preserve the U.S.'s creditworthiness, said David Wessel, director of the Brookings Institution's Hutchins Center on Fiscal and Monetary Policy. That means payments to Social Security and government contracts, among others, would stop.
"The bottom line is, if they don't raise the debt ceiling, somebody's not going to get paid," Wessel said. "If they have a priority list, government contractors are going to be at the bottom of that list."
Wessel said he believes the market would react negatively enough to a failure to raise the debt ceiling that Congress would be forced to act. However, Wessel said if the stalemate lasts for any length of time, the impact will be significant.
"If it stretches on for more than a couple days, it's going to be terrible for the economy," Wessel said. "Everyone will get paid eventually, but we don't know how long eventually is."
If there's a default, there will automatically be cash flow issues that government contractors should be ready for, Wessel said.
A default would be calamitous to U.S. businesses, especially given the number of additional government contracts brought about thanks to Biden's "Build Back Better" agenda, said Robert Hockett, a law professor at Cornell Law School.
All of those contracts would one into question,” he said …
(Excerpt) Read more at techtarget.com ...
But if they go after defense contractors, the pressure will be on for the GOP to take a deal … we live in interesting times
Defense spending accounts for 12 percent of all federal spending and nearly half of discretionary spending. Total discretionary spending — for both defense and nondefense purposes — is typically only about one-third of the annual federal budget.
Gee, that’s too bad.
What’s for dinner?
L
>> Yellen has already said she will pay interest on treasuries, Social Security, and the military
As she should.
Meanwhile go ahead and send contractors home (especially D.I.E. related contractors), and gubmint employees close behind them!
WITHOUT back pay when/if they return.
How will weapons to the Ukraine be made then?
Live by the sword, die by the sword.
It’s never the bureaucrats who go without pay. All those howling jerks in government always cry “NO ONE IS GETTING PAID” when there is a shut down. When all it means the bureaucrats get a paid vacation because they ALWAYS get back pay.
No doubt women, children and minorities will be hit hardest.
Live by the sword ... when am I gonna get a sword?
No, we live in dire times. But people aren't acting like it. God isn't stepping in, and man appears incapable of fixing the planet.
There are complexities to labor laws that make this all interesting.
If I am a company and have a federal contract, I have a contract. If they miss a payment it is usually an invoice for work already done, for materials already purchased, etc.
If they don’t pay, they still owe the money. At that point legal actions come into play. Interest penalties accrue.
Workers have already likely been paid. Can the federal contractor layoff the workers? Yes, but then they might leave and go elsewhere with their training and knowledge. Would the firm try to reduce hours? Possibly, but will the workers put up with it, before they leave, before they claim unemployment insurance, before they say take vacation and remain on the payroll?
What will going after the defense contractors really accomplish beside motivating large political donors in a major election year? It will just raise the costs to the federal government for straightening out the mess.
The federal government is a drug addict and its drug is other people’s money. It needs to go through withdrawal to get its addiction habit in check.
Will this include the four and five star hotels housing illegal aliens?
Remember what Doris Day did in that old film where the railroad ruined her lobsters? I’m wondering if the contractors could file a lien against federal property in the same way.
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