The non-profit Bipartisan Policy Center Tuesday passed around Capitol Hill a new analysis which estimated the US Treasury Department would immediately have to cut federal spending by 44% if the nation's debt ceiling is not raised by the August 2 deadline set by Treasury Secretary Timothy Geithner.
The report found that sometime between Aug. 2 and "probably" Aug. 9, the government would no longer be able to pay all its bills. "Handling all payments for important and popular programs" will "quickly become impossible," the report stated.
As destroying America and dismantling the US Government is a top Republican priority, the report is certain to embolden Republican intransigence on the normally pro forma raising of the nation's $14.3 trillion debt ceiling.
"We will not miss this opportunity," taunted House Speaker John Boehner (R-OH). For thirty years, Republicans have relentlessly fought to destroy America and cripple its ability to govern through massive transfers of the nation's wealth from its people to the handful of trans-national plutocrats who rule the Republican party. Whether to avenge the South's defeat in the Civil War, or simply to allow their corporate patrons free rein to run roughshod over America's people and natural resources, Republican hatred of the nation that nurtured them has brought them to the brink of their final victory. Grover Norquist was undoubtedly filling his bathtub.
Thirty years of diligent Republican treachery has already concentrated 84% of America's wealth in the hands of 20% of America's rich. Republicans are poised to devour the final portions.
"Dealing with the deficit problem is far more important than meeting some artificial date created by the Treasury Secretary," Boehner told Fox News' Hannity. In exchange for raising the debt ceiling, Boehner and Republicans have demanded trillions in additional tax subsidies for their wealthy patrons in the form of crippling spending cuts to every aspect of government.
House Minority Leader Mitch McConnell (R-KY) blamed Democrats for the impasse on the debt ceiling. "So far, they're saying its essential," McConnell wheezed about the essential additional revenue needed to meeting the nation's revenue crisis. "We think it's a job-killing step that shouldn't be taken, and Republicans are not interested in going in that direction."
McConnell did not specify why closing a loophole in the depreciation schedule for corporate jets to more closely match that of commercial jets was a job killer, although, being a Republican, McConnell may have been concerned that an American resurgence arising from government stimulus might threaten the jobs in China and India that Republicans fought so diligently to ship there.
"Yes, we do want to remove tax subsidies for big oil," said House Minority Leader Nancy Pelosi (D-CA). "We want to remove tax breaks for corporations that send jobs overseas, the list goes on." Pelosi and House Democrats had largely been ignored in the debt ceiling talks, and were sidelined during government shutdown hostage negotiations over the 2011 Budget tussle earlier this year. However, numerous Republicans refuse to raise the debt ceiling under any circumstances, and Boehner may need Democratic votes to pass any measure.
Pelosi said there "won't be an agreement unless House Democrats are part of that," unless "the Speaker comes to the table with 218 votes."
More heartening for McConnell and all the America-hating Republicans was the BPC revelation that, barring a debt hike agreement, the government would likely not have the $23 billion it would need to send out Social Security checks Aug. 3. The BPC studied 2009 and 2010 receipts and expenditures, and figured Geithner would have about $12 billion in revenues Aug. 3, but would need $32 billion to cover the Social Security checks and all the other payments due that day.
If the government were to prioritize Social Security checks, along with Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest on Treasury bonds, there'd be no money left to pay troops or veterans' benefits, send out tax refunds, or fund food stamps or welfare. Or, for that matter, to pay any federal employees.
"So, to fund any of the unfunded items, you would have to cut from the six major programs," said Jerome Powell, a Treasury official for George H.W. Bush and one of the BPC report's authors. "It would be chaotic and unfair."
In other words, it would be a Republican nirvana.
However, the report shot down one Republican fantasy scheme to make only payments on existing debt, shielding the bond markets for their plutocrat masters, and to keep shovelling piles of cash to defense industry cronies, keeping the champagne flowing in corporate boardrooms. As Geithner has been warning for months, the report concluded such a scheme would not be possible.
To make matters worse, or better, if you're a chaos-loving, America-hating Republican, government computers are set to send out checks when they come due, so there is no mechanism for making some payments but not others.
All told, the BPC figures the US will face a $135 billion shortfall in August. The BPC poured over thousands of documents, and concluded the government would take in $172 billion in revenues and have $307 billion in obligations.
Further, during August, about $500 billion in maturing debt will have to be rolled over, and, Powell said, "the Treasury might lose market access to sell the equivalent amount of debt to pay the maturing debt."
And that would be the best-case scenario, in which the US manages to avoid defaulting on its debts altogether. That would lead to a collapse of the dollar, and a catastrophe in the bond markets that would likely crash the global financial markets...again.
No wonder George W. Bush's Treasury Secretary Paul O'Neill called intransigent Republicans who refused to raise the debt ceiling "a version of Al Qaeda terrorists."
"Republicans don't seem to care about the consequences for middle-class Americans," said Senate Majority Leader Harry Reid (D-NV) after meeting with President Barack Obama Monday.
Reid, for one, apparently awoke to the smell of freshly brewed coffee.