U.S. Faces $110B in Unpaid Debt Ceiling Bills

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Oct.1 (Bloomberg) -- Bloomberg Industries’ Nela Richardson runs down the payments the U.S. government needs to make following the expiration of the debt ceiling, what happens if the nation goes into default and the options the Treasury has available if it needs to decide on which bills to pay. She speaks on Bloomberg Television’s “Market Makers.”

October 17? quite a few in this 2.5 week.

In which the debt ceiling comes alive.

On october 23, social security payments are due.

$6 billion in interest rate payment.

November 1, $18 billion in medicare.

$25 billion in social security, 12 billion dollars in military.

On november 5, $12 billion in social security payments.

November 6, 20 $9 billion in interest rate payments.

On november 14, $12 billion in social security payments.

That is over 100 $10 billion in treasury payments and less than a 2.5 to three week.

. -- 2.523 week.

-- 2.5 to 3 week period.

Can the government prioritize?

That is a difficult question.

It is like deciding which child to feed.

The government does not have any statutory authority to decide who to pay and who not to pay.

In 1985, the government accounting office said that they do have that authority.

This is something that the government itself will have to sort out over this time.


-- time period.

Let's say it is legal.

Is the treasury even set up to prioritize?

We are talking about billions, hundreds of billions of dollars.

$80 million deal $100 billion in payments are due every month.

The computer system that the treasury uses is automatic.

It does not have the capacity to prioritize whether to pay interest payments first, which payments to pay first.

There are other obligations, payments to trust funds, payments to contractors, payments to grants.

How do you prioritize it?

What options does the treasury have?

In 2011 when this was a problem before, the treasury looked at a variety of options.

One was to do a haircut, 40% to 50% on all debt, to see if they could pay half.

They have looked at selling assets, a reverse quantitative easing.

Instead of purchasing assets, you are selling them into the economy.

What the treasury decided is that none of those were good options.

The best thing is to create -- collect revenues and not pay anything until you can pay

This text has been automatically generated. It may not be 100% accurate.


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