The U.S. government could fall behind on its bills next month - and even default on its debt - if Congress doesn't raise a $31.4 trillion cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets.
. The day's $26 billion in tax revenues would not be enough to cover about $101 billion in spending obligations promised by Congress.If the Treasury operated under a plan drawn up in 2011, it would not pick and choose which bills to pay and would instead wait until it had enough money to pay a full day's bills. Medical providers would get stiffed for $47 billion in payments from Medicare, the U.S public health insurance program for the elderly. Soldiers also would go unpaid.
Wall Street investors could still be paid for now, but there are risks. With debt principal payments coming due - including more than $100 billion on June 1 - the Treasury would borrow just enough to cover what's due and stay under the debt limit. If investors declined to lend that money out of fear they wouldn't get paid back, America could start missing payments and enter default on its debt, rocking the global financial system.
Provided that capability panned out, the day's inflow of business tax receipts would give the Treasury enough cash to make the debt payment. But revenues wouldn't cover all the other bills due June 15, such as military salaries.
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