On Thursday I am meeting with a staff member of Senator Barbara Boxer . The topic is the debt limit. The current limit is $16.7 trillion. The Treasury pays every Thursday $100 billion to investors and usually investors immediately lend this back to the government in a process called rolling over the debt. It is expected that cash will run out sometime mid October if the debt ceiling is not raised.
There are those that argue that this is an opportunity to cut government spending . One area mentioned is to cut spending on the Affordable Care Act. If the debt ceiling is not raised or if spending cannot be cut enough to pay the debt the US would go into default. A default would wreak havoc with the US economy and would trigger a sharp increase in interest rates. What is your opinion on this issue? If there is a default do you know how it would impact you and your business? If you could talk to Senator Boxer on this what would you tell her?
Last week tax guidance was provided by the Department of Labor and IRS. It was a mind numbing piece but as best as I can tell through my research it will be difficult if not impossible for employers to set up accounts allowing individuals to purchase individual health on a pretax basis. The exception is retirees.
In my last email I mentioned the requirement of the Affordable Care Act that employers notify in writing information about the Exchange [Covered California]. It is not clear whether this can be by email and many have been saying it can’t. I am not sure this is accurate, but if anyone knows for sure please let me know.
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