The Biden Administration, as others before it, has said that if the debt ceiling isn't increased that there will be consequences for all recipients of federal funds. They have specifically warned that the systems used by the Department of the Treasury do not allow them to prioritize one type of payments over others. For instance, they cannot decide that they will pay Social Security benefits on time but delay payments to Defense Department contractors. I'm sure they're telling the truth. However, I'm also aware that they can generally delay payments for a period of time. That happens every month. I know because it's apparent to me that I receive little or no payments of attorney fees in the last few days routinely every month. I've written about this before and have received the response that Social Security is aware of the problem and that it affects claimants as well as attorneys but that it's nothing that the Social Security Administration is doing. It's the Department of the Treasury that holds up payments. My guess is that it has something to do with routine management of the federal debt. There's probably a lot of debt refinancing at the end of each month. That this happens tells me that their systems can hold up payments for a period of time. What else can the Treasury do if the debt ceiling isn't increased other than to delay payments? At the start, payments of Social Security benefits start showing up a day late. Payments of federal employee salaries show up a day late. Payments to Defense Department contractors show up a day late. That's for starters. The delays would increase with time.
Anyway, that's my guess of what will happen but I don't know if Treasury's systems allow them to delay Wednesday's payments until Thursday and Thursday's payments until Friday, etc. Maybe they can hold up all payments for a time but cannot control which payments are released once they lift the hold.
Of course, what I'm talking about would also mean delays in payments to federal bondholders which would put the U.S. into default with massive consequence for the economy but, who cares, being tough on Biden plays well on Fox News and that's all that really matters.
