… this isn't going to be "the gov. shutting down"; that's what happens when the budget can't be agreed upon and government employees get furloughed. The debt ceiling is significantly worse: obligations the government has already agreed to pay out can't be met; normally, in a deficit, we'd just borrow more money to meet those obligations. The nature of the "debt ceiling" is that it puts the kibosh on that. The situation of the Treasury exhausting its "extraordinary measures" (the current state, in the article) has never occurred. (We've played this particular game of chicken before though, though this is cutting it closer than I remember in the past.)
Essentially, the government would stop paying for things. Which things is a level of chaos I wouldn't want to see. AIUI, e.g., that could mean things like social security payouts not getting paid out. That'd obviously be bad, as many aging Americans depend on those payments, and such an action would be to throw them under the bus. Another alternative is to default on debt, such as bonds, or perhaps say "we'll pay … uh … later?", and those consequences are mentioned in the article: the US's credit rating could be harmed (we've demonstrated that we're not as reliable a debtor as previously thought; this would translate to higher rates in the future, meaning borrowing costs the taxpayer more). Those people that hold US obligations would be harmed: the value of those would drop, representing the now-realized higher likelihood of a US default. (This would harm, e.g., investment accounts, I would imagine more so for older Americans, as younger Americans are more likely to have more money invested in riskier investments, like stocks. Although should this happens, I fully expect a (at least short term) Wall Street panic and stocks drop too…)
Holding America hostage with the debt ceiling is childish; the only real answer here is to raise the debt ceiling and then act like adults and get together and agree on a balanced budget with a surplus that can be used to start making headway into the owed debt until the national debt is at a reasonable level. But … I don't see that happening anytime soon; I think the most realistic path to such a budget involves taxing the rich, something to which the Republicans won't agree to, or cuts to the budget, which one party won't agree to (social services? Dems hate it; military? GOP hates it).
deathanatos|2 years ago
Essentially, the government would stop paying for things. Which things is a level of chaos I wouldn't want to see. AIUI, e.g., that could mean things like social security payouts not getting paid out. That'd obviously be bad, as many aging Americans depend on those payments, and such an action would be to throw them under the bus. Another alternative is to default on debt, such as bonds, or perhaps say "we'll pay … uh … later?", and those consequences are mentioned in the article: the US's credit rating could be harmed (we've demonstrated that we're not as reliable a debtor as previously thought; this would translate to higher rates in the future, meaning borrowing costs the taxpayer more). Those people that hold US obligations would be harmed: the value of those would drop, representing the now-realized higher likelihood of a US default. (This would harm, e.g., investment accounts, I would imagine more so for older Americans, as younger Americans are more likely to have more money invested in riskier investments, like stocks. Although should this happens, I fully expect a (at least short term) Wall Street panic and stocks drop too…)
Holding America hostage with the debt ceiling is childish; the only real answer here is to raise the debt ceiling and then act like adults and get together and agree on a balanced budget with a surplus that can be used to start making headway into the owed debt until the national debt is at a reasonable level. But … I don't see that happening anytime soon; I think the most realistic path to such a budget involves taxing the rich, something to which the Republicans won't agree to, or cuts to the budget, which one party won't agree to (social services? Dems hate it; military? GOP hates it).
sacrosancty|2 years ago
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