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Bipartisan Policy Center Visiting Scholar Jay Powell on whether the second of August is really the deadline to raise the debt limit.
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Said this debt ceiling increase we keep hearing.
That is rich set August 2 is an absolute deadline to get a deal done but -- -- actually starting to question that -- -- Hal.
Back with this visiting scholar at the bipartisan policy center who's been.
Have terrific and cutting through all of the the nonsense in Washington and giving us the real deal here of the last few weeks is August 2 a real deadline Jay -- now.
So there -- two things that are getting confused in the dialogue right now August 2 is the date upon which the federal government will of exhausted all of its borrowing authority.
And that's an important day we've never crossed that bright line in any prior debt ceiling impasse and it's very important that we not do so -- so congress should not -- August 2.
But the second date is the date.
Upon which the federal government is no longer able to pay all of its bills and that date will occur sometime between August 3 and August 10.
And we believe it will be toward the back end of that as much as a week after August -- -- explain that to us a little bit more so on his second you can't borrow any more money.
But right then where you where where you get the money and I know you guys to the analysis on this from the third through the tenth.
If you're gonna get that far without having to to miss a payment.
They can't borrow anymore so you got to play as you get money one you've got money in the bank and two you've got incoming cash flow from taxes.
And every day after August 2.
The amount of cash in the bank is gonna go down down down until we reach that point where we can't pay all of our bills and again.
We can get past August 3 August 3 is the big cliff to climb with the big Social Security payment.
If you get past August 3 as we think they will right then it's going to run for several more days after that because this -- the daily deficits are quite small from that point until.
The tenth when there's another big Social Security payment received that on the -- right now than the fifty yet the big interest payment of forty some billion dollars so -- paying it off piece by piece that you get to you I guess the tenth which is you're saying is the real drop dead date and then one.
Well to get to the tenth and you don't have enough cash which is we think likely then then you have a problem you can't pay probably can't make that Social Security payment.
So that the sense of it is about Social Security payment could move out a day or so and then you're really in a -- position and again let me just -- stress.
We don't need to go that close to the cliff.
We don't need to go in other words they can get let's get a deal done before August 2 get this thing figured out -- But did -- just having just because we've come so close now people are really starting to think about it.
Including his rich set a moment ago apparently.
The Treasury Department do you expect when they outlined their plan will be similar to what you guys did which is basically -- pace you are the plant at the bipartisan policy center for -- few weeks ago you pay some bills.
And you just don't pay others right.
Well I I think everyone's assuming that they'll be these very stressful meetings at the Office of Management and Budget to decide what to get.
What gets paid I'm not sure that's gonna happen at all I think the executive branch may say that they don't have the legal authority.
To make these sources that that's very specifically congress' job.
And that what they'll do if they'd make that decision is they'll let the bill stack up and they'll pay them.
In the order in which their view at a available cash flow so that may hold on that's important this is a make a last point here with you -- that means that.
If we do run out of money at some point we could miss a debt payment because people been bringing up the idea that even if you go past the second of August when of the deadline as we won't miss a debt payment because they'll choose to pay that before other things you're saying maybe not.
Now that that's where that theory kind of runs -- -- highway they will make the debt payments will be made a 100% certainty.
And they will be made up on some basis of national security -- or or the law permits have been any case.
Trust me they'll be made -- -- to as far as the other payments they may decide to let them just be paid in the order in which they are due.
OK so no debt defaults of which had some of the make that point so we're very clear on that.
Thank you all factual stuff and thanks again for joining us will.
