US Government Debt Different - Finance Department - University of ...

286The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory LimitA FIFO approach would have led to a de facto prioritization ofaccounts based on temporal payment. On August 2, when allborrowing authority would have been exhausted, expenses exceededrevenue by almost $3 billion. 199 Therefore, $3 billion in expenseswould have carried over to August 3 to be paid before new incomingbills. On August 3, $22 billion in Social Security payments 200 wouldhave become subject to temporal ordering, and could not havebeen paid in full by the end of the day, likely unleashing a politicalfirestorm. Potentially more concerning would be the technical defaulton sovereign debt obligations, which would have occurred on August5, when $1 million in interest expense came due but could not havebeen satisfied due to backlogged payments from August 3. 201 Whiledelay of these relatively diminutive daily interest payments may havebeen excused, failing to make $32 billion in interest payments dueon August 15 would have certainly qualified as a technical default. 202Even if these payments were the first expense of the day, theobligations could not have been satisfied in full until August 25. 203By August 31, the accumulated expense carryover figure would haveamounted to $127 billion, and Treasury would have been elevendays delinquent on appropriated expenditures. 204199Treasury Direct, Daily Treasury Statements, Dep’t of Treasury, Aug. 2, 2011 – Aug. 31,2011. Reflects actual figures. Aug. 3, 2011 Non-debt inflows = $6.287 billion, Expenses =$9.686 billion.200Id.201Id.202Id.203Id.204Id. Unpaid expenses by August 31 based on inflows alone would have been equal to $127.16billion. The first among these delinquent obligations would have been incurred on August 17,2011. See infra Appendix B.