I feel that I really need to write on this subject as too many people do not understand the threat. Just 6 months ago no one in the leadership of the Republican or Democratic Party was believing that the debt ceiling was going to be a problem. This spring President Obama was asked why he did not secure a raise in the debt ceiling along with the concessions that avoided a government shutdown. No problema. He did not believe that the raising of the debt ceiling would be a problem.
Republicans started out strong with the same hostage deal. Cut spending before the debt ceiling will be raised. They first held out an offer of some revenue increases, but have since said no closing of any tax loopholes for corporations or millionaires. The amount of the raising of the debt ceiling must be matched by spending cuts, preferably to Medicare and Social Security. Republicans want cuts to only impact the poor, middle class and elderly and defund safety programs and programs that will regulate Wall Street.
What is the debt ceiling? Many people seem to feel that this is a limit on future spending and will cause no real problems. Shut down the government? No problema. The debt ceiling is past budget obligations. All that deficit spending by 4 years of the Bush administration has now become a problem to Washington. Debt has been entered into and now the Republicans do not want to pay.
If we had not included the Bush Tax Cuts in the deal to avoid a government shutdown, the debt would be on course to be paid off in 10 years. A government shutdown would have been less painful than what is headed our way.
What will be the consequences of failing to raise the debt ceiling even for a short time? Interest rates will shoot up. And you though it was hard to borrow now? The amount of the US debt will raise rapidly. The stock market will plummet sharply 800 or more points. The big earners are protecting their money with investments in short funds. Even if the sudden problems in the economy shake up the Congress so that they then pass a raise in the debt ceiling we will feel the pain for 30 years.
The economy will slow to a stop. No loans, no construction. Forget selling your house and moving to where you might get a job. The consequences of failing to raise the debt ceiling will be spread throughout the world as banks are invested all over the world. Bank failures will pick up and even big banks will fail.
Because the unemployment rate will shoot up as we are forced into another recession, the Republicans will probably win the presidency and many elections in 2012. Even though people will initially blame the Republicans for the horror, it is 16 months until the election. Sixteen months of suffering will lead the people who vote to lash out at the closest target. Corporate funded advertising will redirect the blame to President Obama.
With a Republican president and Republican House and Senate we can expect a Ryan budget in spades. Destruction of Medicare and Social Security, no more cost of living increases for federal pensions. More war, less war who knows? For sure advancement of the Republican's social agenda. No abortions. No minimum wage. No rights for gays. Perhaps a return to laws against gays. No rights for workers. No workplace safety rules. Caveat emptor will be the law of the land.
I am fairly old, but I may live to see the thirty years of suffering that just failing to raise the debt ceiling may bring.