Maybe August 2nd Isn't the Real Debt Deadline After All


Debt and loving it

ABC News is running a "Countdown to Default" clock on the Web front page. It's timed to next Tuesday at midnight. But as a report in The Washington Post notes this morning, despite all the calamitous warnings, August 2nd isn't a hard-and-fast deadline:

Although failing to raise the debt ceiling by the early August deadline would plunge the United States into a sea of uncertainty, the government might be able to pay the bills and avoid a default on obligations for longer than expected, economic analysts said.

As lawmakers and President Obama rush to craft an agreement to increase the $14.3 trillion debt ceiling, the Treasury Department is standing by its estimate that the government will need to borrow more money after Aug. 2 to pay for all its obligations.

But several new reports — from UBS, Barclays and Wells Fargo — have cast doubt on that estimate. Analysts have said that daily tax receipts have been higher than anticipated and that the Treasury has quite a bit of cash on hand.

Earlier this year, Reason columnist Veronique de Rugy and Jason Fichtner of the Mercatus center estimated although it would require resorting to various "unattractive options," the United States had enough money in the bank to pay its bills through the fiscal year's end in September, and perhaps even longer.