Ryan Streeter
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There's a lot of talk about whether a default will lead to drastic cuts and all kinds of mayhem. It's likely that Social Security checks will still go out because the government's computers don't know how to print only some but not all of them.
But beyond that, what happens?
Via John McCormack, the Bipartisan Policy Center says the US wouldn't default. Rather, it would face drastic cuts in some parts of the government. Here's the summary:
The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there's enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion).
That leaves you with about $39 billion to fund (or not fund) the following:
- Defense vendors ($31.7 billion)
- IRS refunds ($3.9 billion)
- Food stamps and welfare ($9.3 billion)
- Unemployment insurance benefits ($12.8 billion)
- Department of Education ($20.2 billion)
- Housing and Urban Development ($6.7 billion)
- Other spending, such as Departmens of Justice, Labor, Commerce, EPA, HHS ($73.6 billion)
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