“The first week, we kick the can down the road,” said Carolyn Federoff, an lawyer for the Department of Housing and Urban Development and official with the American Federation of Government Employees.“We pretend like there’s going to be a solution, so we don’t have to really implement the cuts yet.”
Furloughs, particularly at agencies where labor costs make up most of the budget, would be weeks, if not months, away. But the planning for them would need to start almost immediately. Public employee unions plan to call for bargaining over the terms of unpaid days, whether they’re staggered over numerous pay periods or more concentrated.
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‘Fiscal cliff’ calculator’: What it will mean for me
More debt ceiling coverage
Ernesto Londoño
Their directives include personnel reductions and a 30 percent cut for Army base operations this year.
David A. Fahrenthold
Attempts to cut the Columbus Fellowship Foundation illustrate the difficulties of austerity in Washington.
Brad Plumer
The list of people who want to eliminate the debt ceiling includes Alan Greenspan, three former Treasury Secretaries, most of the nation's prominent economists, and analysts dating as far back as the 1950s.
A potentially fateful challenge would probably come in late February or early March, when several federal budget analysts expect the Treasury to run out of borrowing authority. Treasury is technically supposed to rub up against the debt limit at the end of this month, but the agency can tap other sources of funds, such as civil service pensions, to extend the deadline for several weeks.
But that flexibility could be exhausted in late winter, confronting the country, as in the summer of 2011, with the prospect of a government default. In 2011, Treasury examined a range of options to delay the deadline even more, including selling the country’s gold stockpile and paying only some federal bills, according to an August report by Treasury’s inspector general.
At the time, Treasury officials concluded that the best option, if they ran out of borrowing authority, was to hold back on all of a given day’s payments until they had enough money in federal coffers to write checks to meet all obligations for that day. (Even if it can’t borrow money, Treasury receives tax revenue almost every day).
“Treasury reached the same conclusion that other administrations had reached about these options,” the inspector general wrote. “None of them could reasonably protect the full faith and credit of the U.S., the American economy, or individual citizens from very serious harm.”
Lisa Rein contributed to this report.
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