Treasury to lay out post Aug 2 plan soon if no debt deal

Reuters News
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Posted: Jul 27, 2011 6:53 PM
Treasury to lay out post Aug 2 plan soon if no debt deal

WASHINGTON (Reuters) - The U.S. Treasury will lay out a plan in the next few days about how the government will run if it appears Congress might not meet an August 2 deadline to raise the debt ceiling, U.S. officials said on Wednesday.

Republican and Democratic lawmakers are rushing to rework competing plans to lift the $14.3 trillion debt limit and cut the deficit as time runs out ahead of August 2.

"Treasury will provide more information as we get closer to August 2 regarding how the government would operate without new borrowing authority if the debt limit is not increased," said a Treasury official, speaking on the condition of anonymity.

White House press secretary Jay Carney separately told reporters that Treasury was taking the lead in working out the details of what happens if there is no deal.

"As part of due diligence and responsible governance, they have to make those assessments, and at some point closer to August 2 there would be a discussion of that," he said.

Carney declined to spell out if this review would prioritize payments of U.S. debts ahead of Social Security checks and other government obligations.

"They are working on that, and my understanding is they will say that, if and when we get closer to August 2 and cooler, saner heads have not prevailed in Congress, and we don't yet have an agreement," Carney told reporters.

Federal bills falling due next week include $23 billion in checks for recipients of the Social Security retirement program on August 3 and $90 billion in maturing U.S. debt on August 4.

Some money will continue to enter federal coffers after August 2 as people pay taxes, but it won't be enough to cover all expenses and the government will be "running on fumes" if the debt ceiling isn't raised, Carney said.

(Reporting by Caren Bohan, Rachelle Younglai and Alister Bull, Editing by Sandra Maler)