Thursday, July 7, 2011

What Happens on August 3?

Felix Salmon submits:

Samuel Beckett?s famous phrase ?You must go on, I can?t go on, I?ll go on? is a pretty good summation of what will face Treasury come August 3 if there?s no deal on the debt limit. Reuters has a fantastic story this evening on the impossible quandary facing Treasury officials should the unthinkable come to pass; purely as a practical matter, it?s far from clear that it?s even possible to stop making the 3 million payments that Treasury makes automatically every day. Doing so involves a massive computer-reprogramming effort which I?m sure could not be implemented overnight ? and for political reasons nobody is going to get started on such an effort until after all hope is lost for a deal in Congress.

Realistically, then, the government is likely to breach the current debt ceiling no matter what Congress agrees. A failure to lift it would be a bit like

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