A Pew poll conducted this week found that while 51% of Americans recognize the importance of raising the debt ceiling before the Treasury runs out of money tomorrow to avoid a financial crisis, only 37% of Republicans believe it is necessary. Worse yet, that same 37% thinks that it does not need to be raised at all!
The likely reason that so few of these people feel this way is that there are so many of their leaders in Washington, such as Rand Paul, Ted Cruz and Tim Huelskamp who have been telling them that it is no big deal because the Treasury can just “prioritize” payments, paying the debt service first and whatever they can with what is left over.
Unfortunately, not just for the U.S. but for the whole world, that is not the way things work in the real world. This is not your household budget where you can pick and choose what to pay and where you know what is going to come in next week. Sure, at home you can let the mortgage slide until next week and pay a one time late fee, not so with the government debt service.
TEApublicans, like Rep. Tim Huelskamp, have been telling everyone that the government has the money coming in every month to cover government expenses so defaulting is no biggie. In reality the computers at the Treasury are not capable of doing that — and even if they could, the money coming in is not the same as a regular, reliable paycheck. The funds come into the Treasury sporadically — some months more, some less.
If the Treasury is late paying on the debt service it doesn’t mean a one time late fee like it would with a personal debt. It will cause interest rates to rise and cost billions more for years, not to mention what happen to the country’s credit rating and the rest of the world’s economy since our Treasury bonds are the basis for the entire worlds financial systems.
For those who say you are not afraid, you should be — you should be very, very afraid. This is not a joke. This is not just another disagreement between the two parties. This is looming disaster on a scale that the world has never before known.