Email interview with Jared Bernstein, senior fellow, Center on Budget Policy Priorities, Oct. 14, 2013 (response received by email from Grace Leeper, communications assistant, CBPP)
From: Selby, Gardner (CMG-Austin)
Sent: Monday, October 14, 2013 12:20 PM
Subject: Urgent fact-check inquiry
Good afternoon. We are checking a congressman’s statement that the US is not going to default even if the debt ceiling is not raised because the government has $3 trillion in cash flow, so it can pay its bills. His office points us to a chart indicating projected revenues for fiscal 2014, Table 1 of the CBO’s May 2013 report.
Is this cash-flow reference a factually accurate statement? Why or why not? What other information would you recommend we consider?
--the $3 trillion in revenue covers the full fiscal year--if we fail to raise the debt ceiling, the question regarding default is will there be days when cash flow from incoming revenues is less than required outflows.
--the analysis by the Bipartisan Policy Center say 'yes'
--they show, for example, that if you count expected revenues and spending a few weeks after Oct 18, the former is $106 bn, the latter is $222 bn.
--also, the same CBO table he's citing shows a deficit of $560 billion in 2014, which of course we could not borrow if we failed to raise the ceiling. So here too, even over the course of the year, outlays are greater than revenues.
--We should also note that if he's suggesting we use revenues to pay only our creditors (prioritization), that is default by another name (as you know, we have a piece on that).