By Brian Gardner, Chief Washington Policy Strategist at Stifel

What if There is No Deal: Contingency Plans for a Possible Default

Although the chance of a default on U.S. Treasuries is remote even if the government reaches the X-date (the date when Treasury exhausts its extraordinary measures to manage the debt ceiling and might lack enough cash to pay all its obligations), the possibility cannot be totally dismissed.  Prioritizing thousands of payments is a monumental task and government IT systems are not state of the art.  A recent glitch with Federal Aviation Administration computers that caused a ground stop of U.S. commercial flights and the crash of the Obamacare website when it was rolled out in 2013 are but two examples of government computer systems failing to operate at optimum levels.  So, a computer error, which leads to a default, is possible.  That raises the question of what happens next.

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