Please Stop Freaking Out About the Debt Ceiling. Read This:

[Fern]

Too many are freaking out about the debt ceiling, or it's lack of increase. Govt checks won't stop coming, National Parks won't close etc.

We've had 3 times where the debt ceiling was NOT raised by the deadline. Most recently was 1995 when we went past the deadline by about 5 months before we had any part of the govt shutdown.

Here's the road map to the accounting tricks used by Bob Rubin at Treasury in 1995/1996 to keep cutting checks:

https://www.tsp.gov/PDF/formspubs/GAO-AIMD-96-130.pdf

Here's another one from the GAO: http://www.gao.gov/products/AIMD-96-130

We've been bumping up the debt ceiling quite a bit lately. Here's a recently published example of a road map on how to deal with it if we miss the deadline. This is by Goldman Sachs, who is basically running our country now. GS has actually published several of these. I think this type of knowledge is out in the financial world and that's why they haven't panicked at all:

http://www.zerohedge.com/article/presenting-treasurys-options-continue-pretending-us-solvent

Long-time readers will excuse us as this post is almost identical to one we put up in December 2009 when the debt ceiling was last about to be breached. And future readers will likewise have to excuse us as this post will be put up again some time in November 2011, when the next deadline for raising the debt ceiling approaches. But for now, for those who still are confused by the extend and pretend options available to the US treasury, here is Goldman's now-annual (soon semi-annual, then quarterly, etc) analysis of what Tim Jeethner's can do to avoid bankrupting the United States of America, if only for the time being.

From Alex Phillips and Ed McKelvey of Goldman

No need to panic yet. The Treasury will just the accounting tricks, well known by now, described above to keep things rolling if these clowns in Congress can't get their act together soon.

IMO, the threat debt downgrade is likely more important.

Edit: Looks like we hit the debt ceiling on May 16. Then Geitner started tapping into two government employee pension funds to free up cash. That's but one of the tricks which has been used in the past. I cannot estimate how much money can be raised by the other tricks, but if the past is any indication we previously went about 5 months.

Fern

 

[ProfJohn]

The downgrade is for more important and NOTHING we are doing will stop that from happening at this point.

 

[a777pilot]

Yes, why panic. The President has to be in Chicago on 3 AUG to attend his birthday campaign fund raisers.......come hell or high water.

One must have priorities.

 

[Cogman]

I think the deadline is supposed to be the point where the treasury can no longer do any fancy financial tricks. They are already stopping payments in some areas.

 

[Lithium381]

so are we going to have a balanced budget this year? (not an amendment, just this one year)

 

[wuliheron]

Too late to tell us the sky isn't falling. The angry mob wants blood and the Tea Party is about to end up in the Boston Harbor. You have better luck getting a bull out of a China shop at this point.

 

[a777pilot]

so are we going to have a balanced budget this year? (not an amendment, just this one year)

NO!

We still don't have a budget for FY 2011.

FY 2012 starts on 1 OCT 2011.

 

[MomentsofSanity]

NO!

We still don't have a budget for FY 2011.

FY 2012 starts on 1 OCT 2011.

Just because you keep saying it it doesn't become true. Stop gap spending bill, December. Look into it.

 

[Fern]

I think the deadline is supposed to be the point where the treasury can no longer do any fancy financial tricks. They are already stopping payments in some areas.

No.

The deadline of Aug 2 is Treasury's estimate of when incoming federal receipts will be insufficient to meet payment of all bills.

Accounting tricks and gimmicks haven't yet started.

Fern

 

[Doppel]

The downgrade is for more important and NOTHING we are doing will stop that from happening at this point.

I basically agree with this, basically only because there's probably something that could be done, but won't be.

The US won't default this year, though. Never was on the table, isn't now, and won't be even if they don't agree on anything by the 2nd.

 

[Demo24]

"May 16 - The United States reaches its $14.3 trillion debt limit. The Treasury Department begins tapping other sources of money to cover the government's bills."

-Reuters

Which is why Geithner is getting an emergency plan together in case this really doesn't happen. Either way we won't last for 'weeks', and not raising it would be stupid.

 

[Vadatajs]

I think the deadline is supposed to be the point where the treasury can no longer do any fancy financial tricks. They are already stopping payments in some areas.

This. We hit the ceiling in April.

OP is a moron.

 

[BoomerD]

I see the current fracas as just another distraction...much like the big "illegal immigration" fracas a few years ago...all designed to distract our attention from something else...

"Pay no attention to that man behind the curtain."

 

[dmcowen674]

Please Stop Freaking Out About the Debt Ceiling. Read This:

Too many are freaking out about the debt ceiling, or it's lack of increase. No need to panic yet. The Treasury will just the accounting tricks, well known by now, described above to keep things rolling if these clowns in Congress can't get their act together soon.

IMO, the threat debt downgrade is likely more important.

Fern

It's only Republicans feigning panic.

Where was their "panic" under Bush?

 

[a777pilot]

Just because you keep saying it it doesn't become true. Stop gap spending bill, December. Look into it.

Well, the real answer is "yes" and "no".

Public Law 112-10 was passed on 15 APR 2011, which funded the government for the rest of FY 2011, BUT, it was a massive continuing resolution of the spending levels of the FY 2010 budget. The Congress was unable to pass a stand alone FY 2011 budget. Remember the President's budget that was rejected by the Senate on a bi-partisan vote of 0-97?

The bottom line, no matter what the out come of this current budget debate, the FY 2012 budget will be greater than what passes as the FY 2011 budget.

We're addicted to spending.....and it is killing us.

 

[Fern]

"May 16 - The United States reaches its $14.3 trillion debt limit. The Treasury Department begins tapping other sources of money to cover the government's bills."

-Reuters

Which is why Geithner is getting an emergency plan together in case this really doesn't happen. Either way we won't last for 'weeks', and not raising it would be stupid.

I stand corrected. Thanks.

I googled the article, and that's but one of the many tricks available (federal pensions).

There are many others as outlined in the links above. But I have no idea how long we can make it past Aug 2. I guess we've basically gone about 2.5 months so far. If the past is any indication, we have another 2 months or so (IIRC, we went about 5 months back in 1995/1996).

Fern

 

[HeXen]

lets file chapter 11

 

[a777pilot]

It's only Republicans feigning panic.

Where was their "panic" under Bush?

It was there. I had great problems with the decisions made by Bush(43). It's just that the decisions of our current Fool, Bobo, the Post Turtle, are even more egregious.

 

[SilentAlfa]

http://www.zerohedge.com/article/presenting-treasurys-options-continue-pretending-us-solvent



No need to panic yet. The Treasury will just the accounting tricks, well known by now, described above to keep things rolling if these clowns in Congress can't get their act together soon.

IMO, the threat debt downgrade is likely more important.

Fern

Lol are you kidding me

That Zero Hedge article is from January 31st. In the first bullet he says "in fact, last week the agency invoked the first of several options—running down the Supplemental Financing Program (SFP)—to buy several weeks of additional time against what otherwise would likely be an exhaustion of net borrowing authority by early spring." So the treasury started doing accounting tricks SEVEN MONTHS ago according to the article you cited to say that the accounting tricks haven't even begun yet! On August 2nd we're done bro. There's no more rabbits to pull out of the hat after that.

IMO pretty funny that the article you cite pretty much states the opposite of what you were trying to say (that the accounting tricks havent started yet)

 

[K1052]

I stand corrected. Thanks.

I googled the article, and that's but one of the many tricks available (federal pensions).

There are many others as outlined in the links above. But I have no idea how long we can make it past Aug 2. I guess we've basically gone about 2.5 months so far. If the past is any indication, we have another 2 months or so (IIRC, we went about 5 months back in 1995/1996).

Fern

We weren't running the deficits then that we are now nor was the economy in bad shape so we're probably about out of "tricks".

 

[Fern]

Lol are you kidding me

That Zero Hedge article is from January 31st. In the first bullet he says "in fact, last week the agency invoked the first of several options—running down the Supplemental Financing Program (SFP)—to buy several weeks of additional time against what otherwise would likely be an exhaustion of net borrowing authority by early spring." So the treasury started doing accounting tricks SEVEN MONTHS ago according to the article you cited to say that the accounting tricks haven't even begun yet! On August 2nd we're done bro. There's no more rabbits to pull out of the hat after that.

IMO pretty funny that the article you cite pretty much states the opposite of what you were trying to say (that the accounting tricks havent started yet)

Different debt ceiling. They were doing tricks at that time because it wasn't raised until the next month.

Fern

 

[Vette73]

I think the deadline is supposed to be the point where the treasury can no longer do any fancy financial tricks. They are already stopping payments in some areas.

The deadline has already passed. The treasury is doing tricks right now to keep us going and august 2 is when the bag of tricks runs out if I remember the story correct.

EDIT:

Yep Aug 2 is when the tricks run out. Some say they could do some other tricks to buy another week but that could get messy.

"Some economists suggest the government could get by for a week or more beyond the Aug. 2 deadline"

"However, Treasury argues that, despite this cash on hand, next Tuesday is still when it will run out of accounting maneuvers."

So Aug2 by the treasury or maybe a week more if you spin it more.

 

[rudder]

The Feds take in $200 billion per month and spend $300 billion. Something has to give and raising the debt ceiling every few months will not solve anything.

 

[SilentAlfa]

Different debt ceiling. They were doing tricks at that time because it wasn't raised until the next month.

Fern

In any case it doesn't matter because August 2nd is when the tricks run out, and no amount of spin is going to allow the Fed to magically hold out for five months.

 

[Doppel]

The deadline has already passed. The treasury is doing tricks right now to keep us going and august 2 is when the bag of tricks runs out if I remember the story correct.

EDIT:

Yep Aug 2 is when the tricks run out. Some say they could do some other tricks to buy another week but that could get messy.

"Some economists suggest the government could get by for a week or more beyond the Aug. 2 deadline"

"However, Treasury argues that, despite this cash on hand, next Tuesday is still when it will run out of accounting maneuvers."

So Aug2 by the treasury or maybe a week more if you spin it more.

I am sure they can do more tricks. And if they truly, honestly, cross my heart can't, well then there will be a deal made by then, no doubt.