That is the amount of money the Treasury Department will need to come up with on Default Day, October 17, to fully-service the $120 billion in short-term Treasury bills that come due that day, assuming a successful rollover of that debt.
Here are the amounts of federal tax deposits from, in order, 10/16/2012, 10/17/2012, and 10/18/2012 – $8,148,000,000, $6,751,000,000, and $1,980,000,000. Surely Treasury Secretary Jack Lew can’t be serious when he says he might not be able to come up with the cash to service that “pitiful” (in federal government terms) interest amount.
There’s another $40 million in interest coming due next week Thursday, and $5.1 billion at the end of the month, which is less than what the federal government took in on two of the three days mentioned above. Even the $56 billion in interest due to be paid out on 11/15 is less than a third of what came into the coffers last November.
In short, the only way there is an “interest-only” default in the near-future is if President Barack Obama and Lew order one. The bad news is, if they do order one, that opens the door to either a default on principal as investors refuse to reinvest in Treasury securities or hyperinflation as the Federal Reserve soaks up what isn’t bought by private and foreign interests. I’m not convinced that isn’t their goal.