July 15, 2011
Federal officials have reached out to banks and investors to discuss the government’s plans for its paying obligations after August 2 in the event the debt ceiling isn’t raise, The Washington Post reports.
Among the options being considered to raise revenues while borrowing is prohibited, are the suspension of non-critical payments, and the sale of federally-owned student loans, mortgages, and even gold reserves.
The government is facing a $159 billion deficit in August, according to the Bipartisan Policy Center.
The Post is reporting that financial firms and investors were skeptical of the plans when briefed by Treasury Department officials, arguing there would be chaos in the markets due to speculators quick to scoop up valuable assets at low prices from a cash-starved government.
Rating agencies have said any partial default on its obligations, or steps to pay only some of the nation’s bills could be met by a downgrade of federal debt — which would cause further economic turmoil.
This article was posted: Friday, July 15, 2011 at 8:12 am