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Raising the Debt Ceiling

August 2: default day, or just another Tuesday

Heidi Moore Jul 26, 2011
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Stacey Vanek-Smith: President Obama and House Speaker John Boehner took to the airwaves last night to make their respective cases in the debt ceiling debate. Both men did agree something has to be done by Aug. 2. That’s when the U.S. Treasury says the debt clock runs down. But Marketplace’s Heidi Moore says maybe it’s time to reset those clocks.

Heidi Moore: The debt ceiling debate has been going on almost endlessly for over a year. And with the end in sight on Aug. 2, what’s one more week?

Jeff Cleveland: You can still go beyond Aug. 2 — I think that’s put out there as a D-Day, this deadline day, but it’s not really.

Moore: That’s Jeff Cleveland, an economist with Payden & Rygel. He says we have wiggle room. And he’s right. Barclay’s, the investment bank, said today we may have as long as Aug. 10 to raise the debt ceiling. That’s because we’ve got more tax revenues in July than we thought — $11 billion to be exact. So, now we’re practically rolling in dough, right? Well, not exactly. Everyone’s worried the U.S. will default when we don’t have enough money to pay the interest on the debt. The treasury still has to pay that off and the tax revenues won’t help. We owe $30 billion in interest.

Cleveland: It’s not until you get to that Aug. 15 point where you have make that payment. That’s a large chunk of money.

Moore: It’s a doozy. But it’s nothing compared to the prospect of two more weeks of Washington sniping and speeches. In New York, I’m Heidi Moore for Marketplace.

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