The Republicans are playing chicken with our economy right now, and I’m deeply concerned that they won’t yield at the last minute.
So, you’ve no doubt been seeing headlines about the looming debt ceiling (or debt limit) fight and that the U.S. might default on its debt in early October. Let me do a quick explainer on what that means and why most Americans will be affected negatively if this situation isn’t taken care of immediately.
Let me use a credit card analogy to help out. Just like we can’t spend more money on our credit card than our credit limit allows, America has a debt limit that allows us to borrow up to that amount. Every year, Congress determines a budget — how much they’ll spend on the military, Social Security payments, etc. The Treasury pays those bills by collecting taxes and then borrowing money to cover the gap. (And the borrowing they do is issuing Treasury bonds.)
So the situation we find ourselves in is that the U.S. will run out of money to pay its bills in early October, UNLESS Congress suspends the debt limit. And right now, the Republicans are refusing to do that.
Just last night, the House passed a bill to raise the debt ceiling, but the Senate would need 10 Republicans to pass it, and so far only John Kennedy (Louisiana) has said he will.
So what happens if we run out of money? The U.S. defaults on its debt, which we’ve never done before.
The likely chain of events is this: All federal workers would be furloughed. No Social Security, Medicaid, pension, etc. payments could be sent out. Federal services all over the country would be halted. Then, interest payments would go up, costing taxpayers and businesses a lot of money. The U.S. would no longer be seen as a safe place to invest money, so foreign countries would take their investments elsewhere.
White House economics reporter Jeff Stein reported that a default would likely, at the very least, cost up to 6 million jobs, wipe out $15 billion in household wealth, and increase unemployment to 9%. (source)
How to help
The only thing that can be done is to put pressure on Republican Senators. They, quite literally, hold the fate of our economy and pocketbooks in their hands. If you have a Republican Senator, call them TODAY to demand that they stop playing chicken. All you need to say is, “Hi, I’m NAME and I’m a constituent of the Senator. I demand that s/he vote immediately to raising the debt ceiling so that America does not default on its debt. Everyone loses if that happens.”
Thank you for taking action.