by Jason Lange
WASHINGTON (Reuters) – A bipartisan think tank warned on Friday that the US government could start missing some payments from Dec. 21 if Congress doesn’t raise the debt limit, while senior Democrats and Republicans seek a solution to this financial calamity.
The Bipartisan Policy Center’s projection, based on up-to-date official data on government tax revenues and spending, underscores the growing pressure on President Joe Biden’s Democratic Party to find a way to raise the debt limit — now 28.9 trillion. of dollars – and avoid the heavy economic repercussions that missed payments could cause.
Congressional leaders, including Senate Majority Leader Chuck Schumer and his Republican counterpart Mitch McConnell, are exploring the possibility of linking the debt ceiling to the National Defense Authorization Act (NDAA), according to with a person familiar with the matter.
Congress passed legislation on Thursday to fund the government through mid-February, avoiding, for now, the risk of a partial stoppage. But the task of overcoming partisan differences over the debt ceiling can be more difficult and pose far more severe risks.
Once the Treasury Department hits its borrowing limit, it will only have tax revenue to pay its bills, and since it borrows nearly 40 cents for every dollar it spends, it would start not paying amounts owed to creditors, citizens, or both.
Shock waves would affect global financial markets, and domestic spending cuts would push the US economy into recession, with the government defaulting on everything from Social Security benefits to salaries.
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source https://pledgetimes.com/us-government-may-default-on-payments-from-december-21-says-think-tank-istoe-money/
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