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 WASHINGTON — The Treasury Department is preparing to answer a question that it has dodged and rebuffed for months: If there’s not enough money for everyone, who is left empty-handed? 
 
 Officials said Wednesday that the department would address the issue later this week unless it became clear that Congress would vote by Aug. 2 to let the government borrow more money. 
 
 The outlines of the answer, however, already are clear. Officials have said repeatedly that Treasury does not have the legal authority to pay bills based on political, moral or economic considerations. It cannot, for instance, set aside invoices from weapons companies to preserve money for children’s programs. 
 
 The implication is that the government will need to pay bills in the order that they come due. President Obama has warned as a result that the government “cannot guarantee” payments of Social Security benefits or other popular programs. Officials also have disputed the assertion of some Republicans that the government could prioritize interest payments. 
 
 Several independent analysts estimate there is enough money on hand to pay the bills until Aug. 10. Treasury has declined to provide its own estimate. 
 
 “You’re basically running on fumes from midnight Aug. 2 forward,” the White House spokesman, Jay Carney, told reporters Wednesday. 
 
 With time running short, a planning process that began early this year with small meetings that even participants did not take entirely seriously has grown into a consuming preoccupation. 
 
 The Treasury secretary, Timothy F. Geithner, continues to meet with staff still working on other issues. On Thursday morning he is scheduled to meet the president of the Ivory Coast, Alassane Ouattara. But most of Mr. Geithner’s time is now devoted to advising the president and bracing the department. 
 
 The technical challenges are formidable. The government keeps its cash on deposit at the regional banks of the Federal Reserve, which issue payments at Treasury’s direction. The process, largely automatic, must be adjusted to allow for human intervention. 
 
 Officials also are starting to address the consequences likely to flow from a disruption in payments. 
 
 The federal agency that oversees national banks said Wednesday that it would tell banks to “exercise judgment” before penalizing customers who overdrew their accounts because money from the government did not arrive on schedule. ||||| Taking square aim at the White House, Republicans prepared to bring to a House vote Thursday a two-step $2.5 trillion debt ceiling bill that will avert default next week but threatens more conflict — and renewed instability — in six months. 
 
 Vice President Joe Biden and Senate Minority Leader Mitch McConnell remain in conversation over how to defuse the building confrontation before the threat of default next week. But with stocks falling again Wednesday, the fight between Speaker John Boehner and President Barack Obama has become so personal that each side says the other needs to find some way to save face before reaching a deal. 
 
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 reset Lee 'forcefully' disagrees with McConnell on Plan B POLITICO 44 
 
 Fifty-three senators, 51 Democrats and two independents, signed a letter to Boehner on Wednesday vowing to oppose the House bill. But the speaker is unapologetic about his intentions to use the default crisis to try to jam the Senate. And at a GOP conference Wednesday morning, he enlisted conservatives to be his “army” after he had stood “toe to toe” with the president and put his “neck on the line” for them. 
 
 “There are only three possible outcomes in this battle: President Obama gets his blank check; America defaults; or we call the president’s bluff by coming together and passing a bill that cuts spending and can pass in the United States Senate,” Boehner told the rank and file, according to aides to the speaker. “There is no other option.” 
 
 Republicans will hold another conference Thursday morning at which a final decision can be made about moving ahead. But after retooling the bill and getting a higher savings score from the Congressional Budget Office late Wednesday, there was growing confidence that Boehner will move ahead. 
 
 As now written, the measure allows for two adjustments in Treasury’s borrowing authority, each contingent on achieving at least matching savings. 
 
 The first — a $900 billion increase in the debt ceiling — is paired with a set of 10-year statutory spending caps intended to wring savings out of future appropriations bills to fund government operations. 
 
 CBO had stunned Republicans late Tuesday when it estimated that the 10-year deficit reduction would be only $850 billion — well short of Boehner’s $1 trillion target. But after some refinements Wednesday, the bill won a higher CBO score of $917 billion, just enough to cover the full $900 billion. 
 
 The changes were largely technical and driven more by CBO scoring methods than any real additional cuts beyond those Boehner had already proposed at the beginning of this week. 
 
 Indeed, in trying to be tougher on spending, the leadership fell into a trap by imposing statutory outlay caps for appropriations bills in 2012 and 2013. It is always a bit of a gamble to estimate the rate at which appropriations — budget dollars in the bank, so to speak — will be drawn down by agencies and go out the door in the form of direct outlays. But in this case, the GOP set its caps so high that it exceeded what CBO predicted the spending rate would have been with no such restrictions.
– Harry Reid and John Boehner each made progress in their quest for votes yesterday—but that actually drove them further away from a compromise. House Republicans and Senate Democrats “seemed to operate in alternate realities,” the New York Times observes, with each sure the other would eventually cave and accept their bill. If there’s hope for a compromise, it might come from Joe Biden and Mitch McConnell, who according to Politico are in talks on how to end the showdown. To build support for his bill, Boehner tweaked it to raise its disappointing CBO score to $917 billion in savings—mostly through technical changes that took CBO accounting practices into account. But 53 Senators, including two independents, signed a letter saying they wouldn’t pass the House bill. The standoff spooked investors and sent stocks plummeting—the Dow fell 199 points, with the Nasdaq and S&P down 75 and 27, respectively, according to MarketWatch. The Treasury is preparing for the worst, too; by the end of the week, it says it will lay out who will and won’t get paid if a deal isn’t reached.