What will happen when the timer runs out on October 17, 2013? For starters, at the end of this day, the United States government will find itself at an inability to borrow money. In other words, the limit will be maxed out. As a result, the government and treasury officials will be left with “enough” amount of cash to pay for bills going forward.
Here’s a little insight on the “debt ceiling deadline”, which you may want to read for future references:
What is Debt Ceiling Deadline and why is it Important?
Debt ceiling deadline, as stated earlier, is the end of the day on Oct. 17, 2013. As soon as it changes to October 18, 2013, the U.S treasury will no longer have the ability to borrow money. This is just a technical definition. On that particular day, the treasury officials have suggested that there will be a reserve of only $30 Billion in cash, leaving the entire nation high and dry and with the probability of hitting rock bottom.
The fact of the matter is that the U.S. government has not been able to operate without its ability to borrow money, and of course get some share from tax payers.
When is the Default going to Happen?
Officially, the date says that it is Oct. 17. However it will take a little more than that; maybe another two weeks or so, until the default will start showing its effects on our daily routines. As a matter of fact, U.S. citizens have already felt the impact of the shutdown crisis. But they are not aware of what will happen when the government will not be able to pay its bills, whether on time or in full!
- How soon will the reserves run out?
The U.S. treasury officials alongside their barrage of expert “economists” don’t have a specific date in their mind. What they do know is that after the cash reserves will start diminishing followed by the Oct. 17 deadline, the behavior of the investors, tax rates and utility bills will go through a variation phase. On any given day, it is not known how much cash will come or go out of hand.
- And if the U.S.’ credit card is maxed out at some point later?
Given that the speculation of an ongoing shutdown deal does not go through all the way, there is going to be another deal – of course. But this latter deal will come at a huge price. The nation’s credit card will be maxed out and the checking accounts of average citizens will be left with little or no amount of cash.
Mark Patterson, Former Treasury Chief of Staff says that the financial crisis is more or less like a situation where you are “driving with your car on empty, about to go into the desert and passing the last gas station. (You are thinking intentionally) I will take my chances and wait for another gas station down the road in the desert.”
Patterson adds, “You might be able to go farther, and you just might because cash does come in over the transom at Treasury, but you just don’t know how far you can make it.”
Care to know about the BIGGEST government expenditures?
In near future, the U.S. treasury will have to pay bills at a juncture sooner or later. The official due dates for following bills are appended below:
- $12 Billion to be Paid in Social Security Benefits – October 23, 2013
- $6 Billion to be Paid (with Interest) to Treasury Securities – October 31, 2013
- $58 Billion to be Paid as part of Medicare Reimbursement Schemes, Military Aid Programs and Social Security benefits + Retired Officials Pensions – November 01, 2013
Who will be affected the most after our government is left with no cash?
The government will have to make a few tough calls – and all at the cost of a common American citizen’s financials. Of course the government will be liable to pay creditors first because those payments are maintained on daily basis. People will not be seeing their checks turning in. It is expected that the government will not be playing a game of “favorites”, and one day resolve the oscillating issues.