Politicians can argue all they want about the best policies, but try as they like, they can’t repeal mathematical certainties. If the debt ceiling is not increased by August 2, the federal government will not have enough cash on hand in August to meet its legal obligations.
Let’s look at the arithmetic.
According to the highly respected Bipartisan Policy Center, the U.S. in August will take in a total of $172.4 billion in revenue against obligated payments of more than $306 billion. This will leave a $134 billion shortfall if the debt ceiling is not increased. The Treasury department would then have to decide which among 80 million monthly payments would be paid and which ones would not.
A new interactive tool based on the Bipartisan Policy Center’s analysis, shows how difficult such choices will be. I used the Washington Post’s tool to see what would happen if the government started out by funding only Social Security checks, Medicare and Medicaid reimbursement, active military duty pay, Defense contractors, IRS refunds, and the VA.
Guess what? The Treasury would be left with $2.8 billion in cash on hand and $137.1 billion in remaining obligated payments due. Here is a list of what it wouldn’t be able to fund, according to the Post’s tool:
- Tuition assistance for college students, special education programs
- Current and retired Federal workers
- 3.7 million people on unemployment benefits
- Food stamp recipients, child nutrition programs, and the Women, Infants, and Children program
- HHS grants, such as National Institutes of Health, Centers for Disease Control and Prevention and Food and Drug Administration, for research and projects
- Housing assistance for 1.2 million poor households, rental assistance recipients
- Support of local and state governments in design, construction and maintenance of the national highway systems and programs involving the national transportation infrastructure
- Energy research, national nuclear programs
- FBI, federal courts
- Job training and employment services
- Programs that support public transportation systems such as buses, ferries, light rail and subways
- Programs protecting health and the environment, such as oil spill cleanup and air quality
- Programs for small businesses, such as loans, training and contracting
- Smaller costs in such agencies as State Department, Agriculture Department, Federal Railroad Administration, and U.S. Post Service money orders and District of Columbia funds
The Treasury could take its remaining $2.8 billion cash on hand under this scenario to fund a few of the above programs—but almost the entire federal workforce ($14.2 billion for salaries and benefits) would still have to be laid off.
This is why I still think it is very possible that the Treasury department would suspend paying doctors and hospitals for taking care of Medicare patients, freeing up $50 billion to keep more agencies open and public servants on the payroll.
The numbers don’t settle the political argument, of course, but maybe it will get people to put aside their ideological talking points for a second and look at the facts.
The fact is that small, across-the-board cuts in every federal agency, as one reader of this blog suggested, won’t be enough to make up for the cash shortfall. The federal government simply won’t be able to meet its payments on the debt, send ending out Social Security and Medicare checks, and issue paychecks to active duty personnel, without eliminating much of everything else the government does including most of the federal workforce. The safety of food and drugs, medical research, the VA, and many other programs of concern to physicians and patients would be among those at risk.
Or it can cut off payments to doctors and hospitals to keep some of these programs open.
Just do the math.
Today’s question: Try out the Debt Interactive Tool yourself and tell us what you think it says about the consequences for Medicare and Medicaid, the VA, CDC, NIH, and many other public health and safety programs if the debt ceiling is not increased.