The U.S. Treasury Department said Thursday that it will provide more information on how the government will determine what bills to pay should Congress fail to raise the nation's borrowing limit by the Aug. 2 deadline.
Treasury said it will release details in the coming days regarding which payments will take priority over others. It makes an average of 80 million payments a month.
The Treasury also said it will go ahead with its regular weekly auction of three-month and six-month Treasury bills on Monday _ a day before the deadline. The money raised from that auction will go toward redeeming $87 billion in securities that will mature on Aug. 4. Treasury said this operation will not breach the current borrowing limit.
Secretary Timothy Geithner has said that after Tuesday he will have exhausted all of the maneuvers he can use to clear room under the current $14.3 trillion borrowing limit.
The government reached its borrowing limit in May. President Barack Obama and Republican lawmakers have been at an impasse for weeks over a deal that would raise the nation's borrowing limit while also putting the country on a path to reduce its deficit over the next 10 years.
The nation's borrowing needs have surged to finance its record budget deficits. This year's imbalance is expected to top $1 trillion for a third straight year. At present, the federal government is borrowing 40 cents of every dollar it spends.
Treasury needs to borrow $125 billion in new debt each month. That is in addition to $500 billion in maturing debt that it must refinance each month.
The administration has had a team working on contingency plans for a number of weeks but it has kept details of those discussions secret.
Even if the government does not increase the borrowing limit, it would be able to refinance existing debt as it comes due as long as it does not increase the total amount of debt outstanding.
Private analysts have said that the government would make it a top priority to make payments on its existing debt. Missing one of those payments would mean the government had defaulted on its debt obligations, a situation that would send shock waves through financial markets.
Some Republican lawmakers have argued that the government can function for a time by just setting priorities on its payments, using the cash it has on hand. Private economists have estimated this approach could buy a small amount of time for Congress to raise the debt ceiling, pushing the date out perhaps as far as Aug. 15.