WASHINGTON The Treasury will lay out a plan in the next few days about how the government will operate if it appears Congress may miss an August 2 deadline to raise the debt ceiling, officials said on Wednesday.
Republican and Democratic lawmakers are rushing to rework competing plans to lift the $14.3 trillion debt limit and cut the deficit as time runs out to secure a deal by Tuesday, when the federal government loses its authority to borrow.
"Treasury will provide more information as we get closer to August 2 regarding how the government would operate without new borrowing authority if the debt limit is not increased," said a Treasury official, speaking on the condition of anonymity.
White House press secretary Jay Carney separately told reporters that Treasury was taking the lead in working out the details of what happens if there is no deal on the debt limit.
"As part of due diligence and responsible governance, they have to make those assessments, and at some point closer to August 2 there would be a discussion of that," he said.
Carney declined to spell out if this review would prioritize payments of U.S. debts ahead of Social Security checks to retirees and other government obligations.
"They are working on that, and my understanding is they will say that, if and when we get closer to August 2 and cooler, saner heads have not prevailed in Congress, and we don't yet have an agreement," Carney told reporters.
An operating plan could spell out if certain federal payments would be delayed or Treasury auctions postponed.
Treasury officials had long maintained that prioritizing payments was unworkable. But sources have said the topic was among a number ideas explored in talks at the Treasury and analysts expect this route to be taken to avoid defaulting on the debt.
Federal bills falling due next week include $23 billion in checks for recipients of the Social Security retirement program on August 3 and $90 billion in maturing U.S. debt on August 4.
Some money will continue to enter federal coffers after August 2 as people pay taxes, but it won't be enough to cover all expenses and the government will be "running on fumes" if the debt ceiling isn't raised, Carney said.
Moving to dampen expectations that rising tax collections may buy more time for lawmakers to reach a debt reduction deal, a Treasury spokeswoman said recent tax receipts were in line with the department's forecasts.
Some Wall Street analysts in recent days had suggested that the Treasury now has enough cash to avoid a default on any payment obligations possibly up until mid-August.
The Obama administration has said since May that it would no longer be able to borrow new funds after August 2 if Congress does not raise the debt limit. However, it has never specified a date for when the government would actually start to miss payments on its debt or other bills.
But Carney said August 2 was a real deadline and the country faced a crisis situation if the limit was not lifted.
"People keep paying their taxes. Revenue comes in. Money comes in. The problem is there is not enough money because we can no longer borrow money to pay all our bills," he said.