Think Breaching the Debt Ceiling Won't Affect You? Think again.

 If Congress fails to increase the government’s borrowing limit in time, the result would be a shock to the economy and financial markets.

Writing for The New York Times, Alan Rappeport, Jim Tankersley and Jeanna Smialek explain why breaching the debt ceiling would be very bad for our economy and for individuals. 

"For years, Republicans have sought to tie spending cuts or other concessions from Democrats to their votes to lift the borrowing cap, even if it means eroding the world’s faith that the United States will always pay its bills. Now, back in control of a chamber of Congress, Republicans are poised once again to leverage the debt limit to make fiscal demands of President Biden."

Rather than revising our outdated, flawed income tax system so that higher income earners would pay their fair share of taxes, Republicans would rather cut Medicare, Social Security, and other programs for low and moderate income families. Keep in mind that we are talking about paying debts already incurred by previous Congresses. The last round of Republican income tax cuts for the wealthy exacerbated the debt problem. Republicans more than Democrats are responsible for increasing the federal deficit with their tax cuts for the wealthy.

What is likely to happen if there is not agreement to raise the debt ceiling? The following would occur: "a shutdown of basic government functions, a hobbled public health system, and a deep and painful financial crisis." Remember the last time the government shut down because Republican refused to raise the debt ceiling? 

"The debt limit is a cap on the total amount of money that the federal government is authorized to borrow to fulfill its financial obligations." Note: financial obligations incurred by previous Congressional decisions.

"Just approaching a breach of the debt limit can hurt the economy. In 2011, congressional Republicans and President Barack Obama engaged in a standoff over spending and debt that was resolved just in time to avoid hitting the limit. That brinkmanship rattled investors, consumers and business owners, with concrete consequences."

• Stock prices plunged and didn't recover for 6 months.
  
• volatility in the market spiked . 
• The cost of borrowing for businesses jumped making it more expensive to borrow to grow. 
• Mortgage rates spiked putting a lid on home buying. 
• The credit agency S&P downgraded America’s credit rating for the first time.

Failing to pay our national obligations would "add drastically to the government’s interest payments, which the White House projects will cost the equivalent of 2.6 percent of the total American economy over the next decade, further squeezing the federal budget. It would also threaten to destabilize bond markets globally because U.S. Treasury bonds are largely seen as one of the safest investments in the world."

Let's not do this again.