The debt ceiling for the rest of us
There’s not much out there for the average human being looking to understand what’s going on with the debt ceiling. Why is it such a big deal? What are the dangers? How would it affect ordinary Americans if we didn’t push the debt ceiling up? Default isn’t the end of the world for most people (and for companies it can be a good thing) so what’s the problem?
These are the kinds of questions that people ask us at Marketplace all the time. And it’s tough to find good answers that don’t plunge you deep into the weeds. Or anything else, for that matter.
So I was delighted this week to stumble on two pieces that might help with these kinds of questions. Interestingly enough they come, one from Time and one from Newsweek.
Newsweek first. David A Graham’s piece is called What You Need To Know About The Debt Ceiling. Graham covers all the bases, albeit with a bit of a political bent.
So why in the world would we not increase the debt ceiling?
Three words: politics, politics, politics. Everyone says raising the debt ceiling is important: President Obama said Monday that not raising the ceiling would be “irresponsible.” Geithner has said it would be “catastrophic.” House Speaker John Boehner said, “I frankly think it puts us in an awful lot of jeopardy, and puts our economy in jeopardy, risking even more jobs.” Senate GOP Leader Mitch McConnell insists, “Nobody is talking about not raising the debt ceiling.”
All good stuff. But Graham skates past the issue of what happens if we do not raise the dent ceiling. Fortunately, Time is there to enlighten us. Josh Sanburn answers the question What Would A US Government Default Feel Like For The Average American.
Here it is, in a nutshell:
1. Interest rates on Treasury bonds would rise
2. Government payments would be suspended
3. The stock market would drop
4. Mortgage rates could increase
5. Job losses, possibly by the hundreds of thousands
Nice to know the weeklies have still got it. Even if no-one’s paying for it.
