Debt ceiling consequences
POSTED: Tuesday, October 15, 2013 - 5:25pm
UPDATED: Wednesday, October 16, 2013 - 11:49am
The sky won’t fall on Thursday.
But, if the debt limit isn’t raised, the dominoes will start falling pretty quickly.
If Congress cannot reach an agreement by Thursday, the possibilities for our economy are endless, and all negative.
The US pays 4-million bills a day.
And they are computerized to be paid when they arrive at Uncle Sam’s mailbox.
But what happens if we cannot borrow for bills that tax revenue doesn’t cover?
THINK OF IT LIKE YOUR OWN CHECKING ACCOUNT... AS OF OCTOBER 17, THE TREASURY DEPARTMENT SAYS THE U.S. WOULD HAVE ABOUT 30 BILLION DOLLARS IN ITS ACCOUNT PLUS INCOME FROM TAX REVENUE COMING IN.
ON OCTOBER 23, A 12 BILLION DOLLAR BILL COMES DUE TO PAY FOR SOCIAL SECURITY PAYMENTS.
ON HALLOWEEN, WE OWE SIX BILLION IN INTEREST PAYMENTS ON OUR NATIONAL DEBT.
THE NEXT DAY, A HUGE BILL - 67 BILLION FOR SOCIAL SECURITY, DISABILITY BENEFITS, MEDICARE AND PAY FOR THE MILITARY AND RETIREES.
Some in Congress suggest paying the interest on Treasury notes would technically avoid default.
If our complex payments system could be refigured, that might be technically true.
But world confidence is not technical.
So if politicians are worried about the blame game, who will be blamed when the Chinese are paid, but 58-million retired Americans aren’t, or 1 and a half million service members, or 1.8-million military retirees?
Medicare will stop, the VA will stop, and the blame game gets ratcheted up to Defcon 1.
Most are still betting it still won’t happen and common sense will prevail, even at the last minute.
Meanwhile, the markets are waiting with baited breath.