The US Treasury is down to its last few dollars to spend and then it will go broke.
The US Postal Service is already broke and is defaulting on its obligation to set aside $5.6 billion for retiree health care fund. And speaking of health care, the so-called marketplace for health insurance opened all over the country yesterday with great fanfare only to crash immediately because people were accessing the new websites in large numbers. Shocker, eh? For those who are able to get into the sites, they’re finding that there’s nothing in the marketplace but the usual handful of giant insurance companies offering lousy coverage for expensive premiums. These premiums will be partially subsidized by the federal government through tax credits; that is, if the government had the money to cover such subsidization, which is doesn’t.
Treasury will soon exhaust the last $30 billion it was able to scrape together by using “extraordinary measures,” meaning a desperate scramble to sweep together whatever pocket change it can find to pay some bills. Once that money is spent, which could be a matter of days, the actual shutdown begins unless the government authorizes itself to raise the debt ceiling once again. If that happens, the Feds can borrow for cash flow and keep its doors open.
This drama with the debt ceiling has been going on for over three years now. It’s likely that the federal government will pass more temporary legislation that will suspend debt ceiling strictures until a longer term fiscal plan is put into place. But for any of this to happen and to avoid closing shop, Congress has to stop its idiotic brawling. Of course, it’s this health care subsidy they’re fighting over–with Democrats being bullied about by the most belligerent tic fringe of the GOP.
It seems that we now have to go through this ridiculous process with every fiscal cycle. We know from the last go around that if this brawl continues, US Treasury bonds are going to get unfavorable scrutiny from the bond rating agencies. This will cause bond prices to tumble and interest rates to rise. And if that happens, and is carried on for long, the damage will be severe. And, once again, we’ll be heading for another dark patch. A very dark patch.