The Shutdown Won't Save Us From the Debt Limit

A blog about business and economics.
Oct. 3 2013 12:02 PM

The Shutdown Won't Save Us From the Debt Limit

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Yep, we're doomed.

Photo by JEWEL SAMAD/AFP/Getty Images

Kevin Drum asks whether the government shutdown has slowed federal spending enough to substantially forestall the debt ceiling. I don't know, but I do know that the Treasury Department has not offered any reassuring new updates and that at the end of September Goldman Sachs sent around a note saying that basically it doesn't:

Federal salary payments might decline by around $2 billion, and payments to contractors could decline by a few billion more over the course of a week. Since the Treasury’s projection that it will exhaust its borrowing capacity by the October 17 deadline is based on debt issuance expectations, not only on cash flows, a shutdown over a limited period would probably not affect that deadline. It could delay by a few days the date on which the Treasury would deplete its remaining cash balance after October 17. However, even with a week-long shutdown, our projections imply that it is very unlikely that the Treasury would be able to stretch its cash balances past October 31, because of the large payments scheduled to be made that day.

Back on Tuesday, there was a $6 billion interest payment on the national debt. On the 15th there's another $2 billion payment. On the 23th, there's a $12 billion Social Security payment. On the 31st, another $6 billion in interest. Then on Nov. 1, $18 billion in Medicare payments come due along with $25 billion in Social Security checks, $12 billion in military pay, and $3 billion in SSI. The Bipartisan Policy Center is fairly certain those Nov. 1 payments will leave us tapped out.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.