President Obama and his Congressional opponents are reportedly attempting to meet in order to reach a deal on the budget deficit. Still, the uncertainty has led many to speculate as to what will actually occur if the government cannot come to an agreement, with many believing the consequences would be catastrophic.
One thing has been made clear: if Congress does not increase the $16.7 trillion limit of how much money it can borrow, the U.S. Treasury will not have enough money to keep all of the programs, departments and branches that it funds running. It’s not as if increasing the spending limit is going to magically save the U.S. economy, as a nation $16.7 trillion in debt is hardly stable. Still, it’ll provide a short-term solution to an incredibly complex long-term problem and avoid some of the more devastating effects that would result from an abrupt cut-off of cash flow.
The exact effects of the government being unable to adequately pay its bills are somewhat uncertain. Just as the government has a list of “essential” and “non-essential” branches and departments that either continue operating or remain closed during a government shutdown, the US Treasury is forced to prioritize its spending in the event that their budget becomes limited to its current resources. Analysts from Washington Think Tanks estimate that the US Treasury’s could be unable to pay all of its bills as soon as October 22nd. There are no payments due, however, on that date.
On October 23rd, however, the government must pay $12 billion in social security benefits, the Bipartisan Policy Center claims. A lack of funds could result in missing social security payments. On November 1st, the government is required to pay over $55 billion in Medicare payments and social security benefits, Raw Story reports. Some of that money is also scheduled to be allocated to military members and retirees.
In addition to the governmental effects of a failure to raise the debt ceiling, there are numerous other economic concerns. The stock market could crash, jobs lost, and the country could be sent into a deeper economic recession than seen in recent years. While members of the government from both the left and the right claim that such a catastrophe will not occur, they still have yet to meet anywhere even close to the middle.