Avoiding a Default Crisis
Speaker McCarthy and Republicans in Congress are refusing to pay the bills and threatening a default on the national debt. They want to create a crisis so they can make deep cuts to popular programs like Social Security and Medicare, taking away health care and retirement security from seniors, veterans and working families. But this isn’t just politics–it’s incredibly irresponsible. Failure to pay the bills would cause tremendous economic harm to the American people.
- Public Education: Students who rely on special education services, school nutrition programs and other services for low-income families would face disruption or discontinuation of services.State and local governments would not be able to rely on promised funding for schools.
- Social Security, Medicare and Medicaid: Seniors and others on a fixed income would endure delays in Social Security payments. Medical providers, including hospitals, rural health centers and physicians accepting Medicare or Medicaid would not be able to depend on reimbursement, which imperils their ability to operate and serve patients. Millions of people, including seven million children relying on the Children’s Health Insurance Program, could find themselves without coverage.
- Veterans and Active Military: Veterans and active U.S. military service members would face delays in receiving pay and earned benefits, such as tuition reimbursement, tuition assistance and disability payments. Default would erode trust and confidence in the value of service, potentially discouraging current and future generations from wanting to serve.
- Federal Employees: Dedicated public servants and their families would face hardship as the federal government would not be able to pay employees who help ensure our food is safe to eat, our water is safe to drink and our bridges are safe to drive on.
- Interest Rates: People would see their monthly costs skyrocket as everyday interest rates on cars, mortgages, credit cards and student loans will spike, adding significantly increased financial burdens on working people.
Simply put, if the government cannot pay its bills, families and businesses may be unable to pay theirs. Call your lawmakers and tell them to be responsible. America must meet its obligations, pay its bills, and prevent a national default on the debt NOW.
Questions and Answers about the Default Crisis
Q: What is the default crisis?
A: Speaker McCarthy and Republicans in Congress are refusing to pay the bills and threatening a default on the national debt. They want to create a crisis so they can make deep cuts to popular programs like Social Security and Medicare, taking away health care and retirement security from seniors, veterans and working families. But this isn’t just politics–it’s incredibly irresponsible.
Failure to pay the bills would cause tremendous economic harm to the American people.
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Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues.
Not raising the debt limit would guarantee a recession. The fact that the statutory debt limit can inject such chaos into the American political system and economy is truly odd. The debt limit measures nothing coherent and has no relationship to any serious measure of the economic burden imposed by the nation’s debt. It has as much relevance to the nation’s objective economic health as today’s horoscope. Yet if it’s allowed to bind, disaster would result. And if the price of convincing House Republicans to raise the debt limit is large cuts to federal spending, this still ensures grave damage to the economy and vulnerable families.
Minority Leader Kevin McCarthy and other senior House Republicans are saying that, if their party takes control of the House, they will seek to use debt ceiling legislation as a vehicle to force spending cuts and other policy changes — possibly including cuts in Social Security and Medicare. Using the debt ceiling as a bargaining chip is always irresponsible, but it’s especially dangerous at this moment, when monetary policy is tightening and the economic recovery is fragile.
A number of Republican members of Congress have introduced legislation over the past dozen years that would authorize Treasury to prioritize certain payments if the federal government reached the debt limit, which would prevent Treasury from meeting its legally binding obligations in full because it would be unable to borrow. With the U.S. likely to reach the debt limit later this year, some Republicans are again proposing prioritization plans. But debt-limit prioritization proposals are dangerous. Prioritization is still default, just by another name.