Unless the U.S. Congress increases the federal debt ceiling by August 2, 2011, the Treasury will soon run out of the money needed to pay all of the government's monthly obligations. In order to avoid defaulting on its debt, a situation that could cripple the U.S. economy for years, the Treasury will be forced to choose which federal programs will not be funded. The painful question is, who will get paid and who will not?
How it Came to This: On May 16, 2011, the U.S. government reached its current debt ceiling of $14.29 trillion, at which point the Treasury began dipping into its $232 billion emergency borrowing authority allocated for "extraordinary measures." This allowed the government to temporarily continue fully funding all its programs. But according to Treasury Secretary Timothy Geithner, the entire $232 billion in "emergency" funding will have been used by August 2, at which point the Treasury will be forced to stop funding some programs. Which programs?
One good analysis of this bad potentially very bad situation comes from the Bipartisan Policy Center (BPC).
In its report Debt Ceiling Analysis 2011, BPC states that from August 3 through 31st, the government will take in about $172.4 billion, but would need to spend about $306.7 billion to fully fund all programs, meaning the government will be unable to fund programs costing some $134.3 billion over that period.
Winners: Programs BPC predicts will most likely continue to be funded from August 3rd to at least August 31st are:
Social Security Benefits - $49.2 billion
Interest on Treasury Securities - $29.0 billion
Medicare/Medicaid - $50 billion
Payments to Defense Vendors - $31.7 billion
Unemployment Benefits - $12.8 billion
The total cost of the programs to be continued comes to $172.7 billion, slightly more than the $172.4 government will take in.
Losers: Here comes the pain... Programs most likely to not be funded from August 3rd to at least August 31st are:
Pay for Active Duty Military Personnel - $2.9 billion
Veterans Affairs Programs - $2.9 billion
Federal Salaries and Benefits - $14.2 billion
Dep. of Education (Pell grants, special ed. Programs, etc.) - $20.2 billion
Food/Nutrition Services & TANF - $9.3 billion
Dep. Of Labor (training and employment services) - $1.3 billion
Dep. of Justice (FBI, federal courts, etc.) - $1.4 billion
Dep. of Energy (energy research, nuclear programs) - $3.5 billion
Health and Human Services Grants - $8.1billion
Federal Highway Administration - $4.3 billion
Environmental Protection Agency - $0.9 billion
IRS Tax Refunds - $3.9 billion
Small Business Administration - $0.3 billion
Federal Transit Administration - $1.3billion
HUD Programs (housing assistance) - $6.7 billion
Other Spending - $52.8 billion
The total cost of the programs to not be funded comes to $134 billion, or the difference between the government's revenue and costs without the ability to borrow more money.
Debt Ceiling Analysis 2011 also presents a second scenario under which additional "safety net" social benefit programs, including food and nutrition programs, and housing assistance and education assistance programs continue to be funded at the cost of programs like the Centers for Disease Control and the Interior Department.
The report also includes an interesting day-by-day analysis of the U.S. government's daily cash flow - income vs. expenditures - from August 3rd through August 15th.
Of course, whether the debt ceiling is raised or not, the basic problem remains: the U.S. government borrows 40 cents of every dollar it spends.
Also See:
What is the Debt Ceiling?
Debt Ceiling History
Presidents Who Raised the Debt Ceiling
Photo: GOP Reps Introduce "CAP the DEBT" Act - Chip Somodevilla/Getty Images
Comments
EXCELLENT ! Let it happen – and be done with it ! As long as
the Marxist Failure is in the White House it will be a Sword of Damocles over our heads ! Face it America – Mr. Obama is a
total failure as a leader and President. He was also a failure as a neighborhood organizer ! You have to really wonder, based on his pathetic performance record, what he continues to hide
about his persona that is worth the now TWO MILLION DOLLARS he has spent ! Mr. Obama has earned a place in American History – by being the worst, most inept president in our Nation’s history ! Who better than he to be in the White House when we lose our credit rating !!!
Obama came into power on the down slope established by his predecessor and to expect things to get better at the drop of a hat is ridiculous. Imagine it like a roller coaster ride. He came into power halfway down a steep drop. We have to continue to go down for a while until he can slowly turn things around and we climb back up.
Bush messed up our economy by starting wars, and spending money through unnecessary programs (dept. of homeland security, patriot act, etc) and when things got really bad his term ended and he walked away leaving the country in flames behind him. As the cause of this mess, it’s funny how we blame not him but the person who came after. It’s like yelling at a fireman to hurry up and save your house instead of the pyro who set it on fire in the first place.
Things should have been fixed over time, now they’re forced to fix it overnight and face the music. It’s not Obama’s fault. or do you think you could do better?
VERY well said, Jorge! Thank you.
I agree with you, Jorge. Thanks for thinking critically.
Finally, another person gets it! Bush destroyed our country’s economy and he gets to simply walk away. Whomever had been elected President after Bush was taking responsibility for an impossible mess. This was a no-win for Obama. I do wish he would get a bit tougher but other than that, I think he is trying to make the best of a disastrous situation.
I like what you’ve said! It is what I would call ‘grounding’.
About 325 million true patriotic Americans.
Let bit happen? You sir/madam are a traitor to this country! You are willing to let this great country go into financial ruin because a bunch of naive, newly elected, radical fools are feeling a bit of power for the first time in their pathetic lives? How will we explain to our war weary troops that while they were away a bunch of simpleton idiots, touting ideology over reality let our country meet financial collapse. Apparently, this all seems fine to you. Again I say to you…You are a traitor!
that was @ronfer
This debacle began in the 1980′s under Saint Reagan’s ridiculous tax plan that took money from the poor and put it back in the pockets of the rich. Did the rich share? Did it trickle down? No, and if you don’t believe me look at CEO salaries since that tax plan passed! Obama inherited a huge mess compliments of Bush and his obsession with Iraq! Corporate greed and the congressional foxes guarding the citizen’s hen house is the problem here. We need term limits, we need the lobbyist out of Washington. We need to begin functioning like a democracy again of the people, by the people and for the people and NOT the CORPORATE state we are now living in. We are at the mercy of corporate America. They are in control! They control the puppets in Washington. This is merely the latest show!
What a pleasure to read well written, well thought out and SANE comments. Thanks to you too, Melinda.
When I read the first comment from ronifer I just cringed! It was great to read the comments that followed. We need to continue to think rationally throughout this crisis and not spout off nonsensical derogatory comments that just get others riled up. This is what worries me the most. The zealots who are unable to see the situation from all sides!
corporate america controls both side. D or R it doesn’t matter. the old timers in D.C. have caused all this over the years. lobbyist contribute to both sides. your right lobbyist need to get out of congress and the white house. That CEO from GE works as the job cazr under Obama. his company made 15 billion in profit in the first quarter and no taxes paid. hmmm and he’s the job cazr. he’s also shipping his company’s xray and cat scan division to china. 5000 jobs lost. thanks to all in D.C. and i mean all. we need new blood. D, R – tea party or liberal groups. i dont care just bring in the new ideas to get this country back on track.
We are NOT a democracy and never have been. We are a republic. A country this size would have extreme difficulty functioning as a democracy.
I agree Melinda. Why in the world are the Conservatives defending trickle down economics aka tax break for millionnaires/billionaires. This administration took action to stop the downward roller coaster vacated by Bush who created more billionaires in Wall Street and corporate world, i.e. Bechtel, Halliburton, (hello Dick Cheney). At least he is decisive and well-advised by diverse source of advisers. This is not a clueless president.
President Obama has been dragged down with 2 wars he inherited which put our country into debt after Bush squandered Clinton’s surplus. Oil companies have had their way with us (from Clinton’s $1 gallon gas). Plus we are paying for the human toll and costs of war– injuries and post traumatic stress payments to soldiers, etc.). Since Pres. Obama has taken office, he had to rein in banks and credit card companies running rampant over people (even those with great credit ratings); he got bin Laden; he helped those who were being unfairly treated by greedy health insurers get insurance with their pre-existing conditions and has tried to help the underemployed, unemployed, and poor with affordable health insurance options which should ease the burden on Medicaid. He has tried to protect the rights of women and gays (citizens and taxpayers). All the Republicans are worried about is keeping the Bush tax rollbacks in place for the rich and corporations. We had over 10 years of this policy so far and have the highest unemployment ever! The theory doesn’t work — the greedy “job creators” aren’t creating jobs. Republicans use of “protecting our children’s future” is just a scare tactic too. Republicans trying to take away their safety net or privatize it (Social Security and Medicare) when corporations start the pressure to push people out the door in their 40′s is absurd! There are countries where people pay higher taxes than us but they get what they pay for (health and retirement security). We live in a country where elderly live in deplorable poverty and those who lose their jobs and their insurance, lose their homes! God bless America.
Keep drinking the koolaid. It is brainless twits such as yourself that sits back on their behinds while the rest of us work to pay your bills.
Sheila, some of us brainless twits served in the nation’s armed forces in places like Vietnam or in the Peace Corps or the like and then paid taxes at substantially greater rates over much of our working lives than smart folks like you. For much of that time, we did not have 401K programs or serious profit sharing programs such as many that exist today. We did help to fund Social Security, Medicare and a few other such things without significantly complaining. Admittedly, we had a few advantages over your ilk, the most important of which having been that we gave a damn about somebody and something other than ourselves and our pocketbooks.
YUP, when intelligence is needed —- or even a few relevant FACTS —we get “kool aid, twits” and baseless, random insults. I would listen to a cogent argument, but hate-filled name calling sadly seems to be the norm folks like you, Sheila. We are ALL Americans, we ALL care about our country and we ALL have a right to express our concerns without being bludgeoned by 4th grade taunts and jeers.
And don’t forget Bush’s needless wasted spending on AIDS (115 Billion to Africa) and who can forget the ever popular Hurricane disaster in New Orleans.
The reality is that both parties in Congress are a big problem, perhaps The big problem in getting the economy under control.
Both parties are only concerned about sound bites and reelection.
Quick! Everybody drop your party mask, and think like Americans for a change. Quit blaming somebody..Clinton..Reagan..Obama…Bush. Who cares who originally shot the country. You sound like my kids…”Well he started it!!” As if that makes all the difference
Put people in there who commit to two tours in the office, and commit to leaving.
Either that or when the deficit goes about 3% members of congress automatically become ineligible for re-election.
Well after reading a lot of opinions about what is happening I cannot help but wonder what any of us would have done in Obamas place and if it would have made one bit of difference. This has been building for years because apparently no one wants to sacrifice their part of what ever the government gives them, that they benefit from or that someone they love benefits from. This has been building for a long time. We spend more than we bring in, just how complicated is that? How about we take the % that we are over spending away from every program, every department, every salary every entitlement evenly. It would certainly be fair given the complexity of the situation. I can hear the screams of protest now, “No, not mine!”
I’ve read the comments here and can respect the koolaide drinkers and their thoughts of how well our current President has acting in the interest of those that voted him into office. Shame on Mr. Obama for selling his soul to Wall Street, aka Congress, and selling this great country short. Yes, he came in to office with a mess to solve and a bunch of empty promises on how he was going to do that. You speak of 2 wars, what has he done to end them? He has expanded the “war” in Afghanistan and the illicit bombings of other countries using Drone technology (under the pretense of humanitarian aide). Shame on us for believing in his “America needs change” speeches. He should have been left in the history books as a great orator instead of elected as Commander and Chief.
It is very difficult for me to believe that any active service people would have delayed salaries as long as we are sending hand-outs to other countries and supporting illegal immigrants.
Bravo to most commenters! Can’t blame Obama for this mess, after all he captured Osama and was left with a country is serious debt when he took over the White House. We will enter a quick recession then go into a full blown depression , this is unavoidable. The crisis is real, we may have country in upheaval very soon. God Bless us all!
Nero fiddled while Rome burned, history may well report the same sentiment about the USA.
Even Bush came into the Presidency facing a debt crisis. Obama came in promising to move things forward and he did move us forward into greater debt at a faster rate:
Alex Wong / Getty Images
The debt ceiling has been raised on three occasions under President Barack Obama. The debt ceiling was $11.315 trillion when the Democrat was sworn into office in January 2009 and increased by nearly $3 trillion or 26 percent by summer 2011, to $14.294 trillion.
Under Obama the debt ceiling increased:
by $789 billion to $12.104 trillion in February 2009, Obama’s first year in office, under the American Recovery and Reinvestment Act;
by $290 billion to $12.394 trillion ten months later, in December 2009;
and by $1.9 trillion to $14.294 trillion two months later, in February 2010.
To put China’s ownership of U.S. debt in perspective, its holding of $1.2 trillion is even larger than the amount owned by American households. U.S. citizens hold only about $959 billion in U.S. debt, according to the Federal Reserve.
Other large foreign holders of U.S. debt include Japan, which owns $912 billion; the United Kingdom, which owns $347 billion; Brazil, which holds $211 billion; Taiwan, which holds $153 billion; and Hong Kong, which owns $122 billion.
(found at http://usgovinfo.about.com/od/moneymatters/tp/5-Presidents-Who-Raised-The-Debt-Limit.htm)
He was given four years to make some kind of change even if he couldn’t take down some of the debt, the least he could have done was not continue to increase it at a faster rate than Bush. Stop passing the blame and take some responsibility. He doesn’t deserve another four years.
All of you who Bush was a bad president Obama is great are wrong none of you have looked at all of the fact about what each one of them has done. I am will to bet none you have served in the milltary either or else you would do your home work on each president before speak. Neither one of them great. But you look at what Obama has done you find his poltics has done more harm to America then Bush’
This healt care bill has done nothing to really help americans just to nake a lot of people richer. If you done believe check and see who all has really benfited from it. Now if you go the doctor and do not have money they will not see you without it or insurance. Or go to the hospital you only get a bandage. I have tyalked to and meet many poeple who have niether and heard their conplaints about how hard it is getting to get help. I work in healthcare. You need to look at all of the new taxes that are coming your way to pay the bill. Plus you think we do not need to pay the national debt off you are wrong and so is Obama. You cannot give everyone everything soon you run out of money just look at all of the other countries that have tried to give everything to their people and it did not work. You need to stop asking for a hand out and get a job and take care of yourself and your family. As I do and 40% of amercians!