Granted, the technical limit on US debt is a stupid law. It’s passage was just another way legislators pretend to do something without actually doing anything; it’s as if a club of fat people passed a resolution to go on a diet in two years — every two years. It’s dumb, but a hell of a lot easier than going on a diet.
However, the debt ceiling is not a resolution of a private club, it’s the law of the land, and as it stands, as of Tuesday, August 2, the federal government will not be authorized to borrow any more money. Thereafter, with the ceiling in place, not only will all current bills have to be paid out of the revenues that appear on that day, but bonds that come due will have to be paid in their entirety, instead of simply being rolled over into new ones.
On August 3, according to the Washington Post, the federal government expects to receive $12 billion in revenue, and must pay bills of $32 billion, including $23 billion in social security and disability payments alone. Another $10 billion in bills come due on August 4, offset by just $4 billion in revenue. And on that day, $100 billion in Treasury bonds are due to be retired. (more)