Any deal reached by Republicans and Democrats must go through a series of legal procedures. So it looks as though the August 2nd deadline will be breached. The US Treasury Department is already preparing for a worst-case scenario by drawing up emergency plans. Analysts are speculating how it may prioritize paying its bills.

Each month, the US government has to pay nearly 80 million individuals, companies and organizations. 40 percent of those bills are paid by loans.

According to Barclay's Capital, the US government's revenue from August 3rd until the month's end amounts to around 172 billion US dollars. That's over 130 billion dollars short of what it needs to pay its bills.

The Two-Parties Policy Center has drawn up a list of how the US treasury might prioritize paying its bills.

The priority would be paying interest to US debt holders, a total of 29 billion dollars. That would avoid sinking into default status and a credit ratings downgrade.

Second on the list would be social security bills worth 49 billion US dollars.

Health care bills for seniors, the poor and physically disabled come next. That amounts to 50 billion dollars.

44 billion would be left, only a quarter of the total. With that, the government would face choosing between paying defense bills or paying government employees. It could lead to soldiers in Afghanistan not being paid or some government officials being forced to take leave or cancel their contracts.

Analysts say an increasing number of factors could affect the final list as pressure builds between the two parties.

Go to Forum >>0 Comment(s)