Our nation is just over six days from the most predictable economic crisis it has ever experienced.
The debate over whether to raise the debt ceiling has been both frustrating and dangerous. On August 2nd, the United States will hit what’s known as the ‘debt ceiling,’ preventing our nation from borrowing the money it needs to meet its obligations.
Failing to raise the ceiling doesn’t cut up the President’s credit cards or deny Congress a blank check. It’s actually much more like our nation outright refusing to pay its mortgage.
The implications for a family that defaults on its mortgage are extensive and last for years. Economists agree that the impacts on a nation that defaults on its debt would be catastrophic and last for generations. That’s why making sure America does not default on its mortgage has been one of my top priorities since coming to Washington.
As you may have seen in the news, Washington is at an impasse about the way forward.
The amendment being offered by Senator Reid and endorsed by President Obama is not ideal, but it’s what we need to avert the full onset of economic catastrophe. The plan produces $2.7 trillion in savings through a blend of discretionary spending cuts to which the other party has already agreed. It does not touch Medicare, Medicaid or Social Security and it does not increase revenue or reform our tax system.
This approach is not ideal, but we’ve been left with little choice. We simply cannot afford for America to default on its mortgage.
All Americans would feel the impact of a default. If the government isn’t able to meet the obligations to which it has already committed, the Treasury Department could be faced with brutal choices about what to pay and what not to pay. Do we pay for Social Security but shut down the FBI? Do we pay for Medicare but stop food inspections?
Increased interest rates on mortgages, student loans, car loans and credit cards will hit nearly every American. Economists are predicting job losses of more than 600,000 if we default, and it’s going to be harder than ever for small businesses to access the capital they need.
By defaulting, we will have communicated to the world in no uncertain terms that the United States is no longer the safest investment of its money.
We cannot afford for America to become a bad investment. As we close in on the August 2nd deadline, I will continue to work make sure it never does.