Oct. 2 stands out because an $81 billion payment to the Military Retirement Trust Fund is legally mandated to be paid that day. According to a “debt limit analysis” by BPC, after that bill is paid, the treasury is projected to have only $33 billion in cash to pay $68 billion in additional bills. Each day the debt ceiling isn’t raised, the U.S. government’s deadbeat status compounds. That’s because “the debt ceiling limits the amount that the government can borrow,” Akabas said.
He also reiterated a hard truth. Raising this limit is not a blank check for the government. The money has already been spent on things Congress authorized. “The full faith and credit of the United States is of utmost importance,” Akabas told me, highlighting another hard truth. To not pay those bills would destroy America’s standing as the foundation of the global economy.
Some believe all Treasury Secretary Steven Mnuchin needs to do is prioritize payments to not be in default. But that’s no solution. “There’s close to 100 million bills that are paid each month,” Akabas told me. “You can imagine the treasury secretary sitting on the floor trying to sort out which of those bills he’s going to be paying.”
Listen to the podcast to hear Akabas explain further why prioritization is no solution, why “your savings account, your mortgage, credit cards, student loan payments” would be affected if the debt ceiling is breached, and why such an unprecedented event “could be even worse than we’re talking about.”
“This could really have shock waves throughout every person in the country’s experience as they go through the day-to-day economy,” warned Akabas.