The drama and tension have been building for weeks now. On August 2, the U.S. Government will run out of money. We will default on our debt. Markets around the world will crash. Social Security recipients will not get their checks. We will plunge headlong into a depression. This is the narrative that's been playing out in the media, in the blogosphere, and in the halls of Congress.
The problem: it's bullshit.
According to a story published this morning by Reuters,.
Will the sky fall on August 2 if the U.S. Congress fails to raise the debt ceiling?
Not likely, according to analysts, who say that even without the ability to borrow more money, the government could avoid a devastating default for another week or so. That raises the question of how urgently action is needed to increase the nation's borrowing limit.
August 2 is the date upon which the U.S. will have exhausted all authority to borrow funds, so says Reuters. It's not the date when we run out of money:
...Treasury officials have never said when the government will run out of cash to pay the nation's bills, and the consensus among Wall Street analysts is that the cash won't run out until about two weeks after the August debt-ceiling drop-dead date.
"The first risk of a legitimate default is August 15," said Ward McCarthy, chief financial economist and managing director at Jefferies & Co. "Cash is not going to be an immediate problem. The debt ceiling space is not going to be an immediate problem."
The article has more, but that's it in a nutshell. It explains a couple of things:
· Why the markets aren't already in a panic
McCarthy and other Wall Street analysts predict that the Treasury will have enough cash to meet its early-to-mid August obligations, including $23 billion in Social Security payments to the elderly and disabled on August 3.
· Why Boehner is still tinkering with his bullshit legislation:
Analysts do not expect the credit rating agencies to downgrade U.S. debt if Congress does not raise the limit by August 2 and the government is still able to pay its bills.
That could potentially give a divided Congress more time to craft a plan to cut spending and raise the limit on how much Treasury can borrow.
· Why there are reports Geithner has been thinking about leaving the Treasury Department:
Any sign from the administration that Congress has more time to negotiate a budget deal could undermine Geithner's credibility.
This last point is the most telling, because it's not just Geithner's credibility that's on the line. It's Obama's, Reid's, and even Boehner's.
The danger here is that August 2 will come and go without major disruptions. This will make the date of the real Apocalypse, which, according to the article, will come some time between August 10 and August 15 harder to sell to the public. It will give some credibility to the position of teabaggers in Congress:
That view lends credence to claims that some Republicans have been making for days now that the U.S. government will be able to keep functioning and paying its bills even if there is no deal by August 2.
And it might make it easier for Republicans to shift the blame to Obama when we hit the wall for real in a couple of weeks.
And you thought this was all going to be over soon.
12:37 PM PT: From some of the comments, I feel a need to clarify something: I believe we ARE facing an apocalypse if the debt ceiling isn't raised, and I think it's going to happen quite soon. The entire point is that 8/2 isn't as hard and fast a date as it's being portrayed in the narrative, and in a way, that isn't a good thing.