Okay Network faithful, this is a "must read" if you are going to keep up with the firestorm that is about to ensue in Washington, DC over the X date and what may happen after it if nothing is done. Understanding the dynamics of what is in play is critically important for children's mental health advocates. So let's break it down in question format, using the Bipartisan Policy Center slide deck (below) as our guide:
Question 1: What the heck is the X date?
- The X date is the first day on which Treasury has exhausted its borrowing authority and no longer has sufficient funds to pay all of its bills in full and on time. In other words, if the debt limit has not been raised by the X Date, the federal government will begin defaulting on some of its obligations. After the X Date, bills must be paid solely out of incoming cash flows, which will not be able to cover all government spending. The Bipartisan Policy Center estimates that the X Date will occur between February 15 and March 1.
Question 2: Any great ideas for extending the X date? We did it with the fiscal cliff date, why not with the X date?
- President Obama has stated that the 14th Amendment does not provide a reasonable basis for challenging the constitutionality of the debt ceiling: “My lawyers…are not persuaded that [the 14th Amendment] is a winning argument.”
- Press Secretary Jay Carney: “The 14th Amendment [does not give] the president the power to ignore the debt ceiling – period.”
- Treasury has stated that it has no secret bag of tricks to finance government operations past the X Date – Treasury will not attempt to “ fire sale” assets during a crisis.
- Other ideas are deemed impractical, illegal, and/or inappropriate(platinum coins, IOUs).
Question: So what happens if we go beyond the X date?
- There is no precedent; all other debt limit impasses have been resolved without reaching the X Date. Treasury has never failed during a debt limit impasse to meet a payment obligation.
- Chairman Bernanke: "[Going past the X Date] would no doubt have a very adverse effect very quickly on the recovery. I'm quite certain of that."
Okay Network faithful, you get the idea. This is serious stuff and certainly no time for us to relax. Read through the slide deck to see various scenarios of what actions might be taken, like cutting 8 billion in HHS grants (that ought to get your attention), 10.1 billion in Food/Nutrition Services and TANF, etc. In fact, in the two scenarios presented (pay some bills, not others or pay all of each days obligations once enough revenue is available) HHS grants get an 8 billion dollar hit either way!
- Here is a link to the full report. A must read for advocates; and an eye opening account of what lies ahead for NDD if the nation does default.
- Another great resource is an article in the Washington Post that summarizes the scenario succinctly.
And finally, Network faithful are encouraged to read the analysis from the Center for Budget and Policy Priorities on the “spending storm” that lies ahead.
It is critical that all Network readers understand what is coming, and coming soon. It has the extreme potential to be devastating to our economy, fiscal policy and maybe most important, low-income and vulnerable Americans - precisely the segment of our Nation that has the least opportunity to roam the halls in Washington, bending the ears of decision-makers to remind them what's right.