According to the report, the Treasury sent out memos to federal agencies last week instructing them to ensure the Treasury is closely informed about their spending, including notifying the agency at least two days in advance of all payments between $50 million and $500 million, and five days’ notice for payments above $500 million.
“Please stress to your staff the importance of these updates during this time and to ensure that your agency’s reports are accurate,” the memo said. “Your reporting offices should be reconciling reported amounts to actual payment activity to ensure the reliability of these reports during the critical period.”
In addition, Treasury officials have also asked those agencies about how flexible their payments can be without postponing them beyond their due dates, which would trigger a default.
Extraordinary Measures
The Treasury has been struggling to find novel ways to forestall a default on the US national debt ever since Congress declined to increase the debt ceiling in January. It has adopted a series of “extraordinary measures,” including postponing payments and immediately spending monthly tax receipts as they come in, to keep the government afloat in the absence of new spending appropriations.
Some other measures not yet adopted include selling off or “raiding” bonds held by federal government trust funds, such as the Social Security Trust Fund or the Highway Trust Fund. While it would quickly raise tens of billions of dollars, it would cost the government more money in the long run due to repayment penalties.
A less serious but technically possible option is for the Treasury to simply mint a $1 trillion coin - a solution Yellen has dismissed out of hand.
A default would likely trigger a downgrading of the government’s credit rating and cause an economic crisis.
Political Jockeying
Despite the danger, the Republican-controlled House of Representatives and Democrat-controlled Senate and White House have so far failed to reach an agreement to raise the debt ceiling.
Republicans, who are ideologically opposed to spending on social programs and who enjoy a new majority in the House, have sought to use the threat of a default to force budgetary concessions out of Democrats, including cuts to their most hated programs, such as the Supplemental Nutrition Assistance Program (SNAP), better known as food stamps.
On Tuesday, House Speaker Kevin McCarthy (R-CA) told his GOP colleagues that “we are nowhere near a deal yet.”
“I need you all to hang with me on the debt limit,” he said.