![]() Thus, Schumer’s prediction that Social Security would shut down seems unlikely, although payments could be delayed. Yellen would have to decide whether to prioritize creditors who own debt or the many people who rely on government money for their paycheck or retirement benefits. Much would also depend on how long it takes Congress to address the borrowing cap.” “Treasury would have the funds to satisfy some obligations, but it’s not certain how the agency would handle the disbursements. “To be clear, a debt default doesn’t mean all payments would stop and people would permanently lose out on money they are owed,” they write. While there have been periodic standoffs over the debt ceiling during past periods of divided government, a default has never occurred.Īnd it is important to note, as Luhby and Buchwald do, that the government does not simply cease to operate. The specifics of what exactly will happen seem a bit like forecasting a hurricane – there is a predicted path, but nobody really knows what will happen when the storm makes landfall. Other estimates, like this one from the Bipartisan Policy Center, suggest the X-date could occur any time between early June and early August. She said the X-date could arrive as soon as June 1. “It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills,” Yellen told McCarthy in a letter last week. Moody’s Analytics has predicted a 2008-style crisis, with “spiking interest rates and plunging equity prices,” even if it’s just a brief breach of the debt limit.ĬNN’s Tami Luhby and Elisabeth Buchwald have documented these possible outcomes: “5 ways a debt default could affect you.”īut for all the warnings, the specifics of when the US will cross the so-called X-date – when the country could default – and what will happen in the immediate aftermath are maddeningly vague. Negotiations between the White House and congressional Republicans just got underway Tuesday with the first in-person debt default meeting between President Joe Biden, House Speaker Kevin McCarthy and other leaders. There would be “economic calamity,” according to Treasury Secretary Janet Yellen.įor a Republican prediction, look to the “widespread job losses, decimated retirement savings and higher borrowing costs” anticipated by Joshua Bolten, the CEO of Business Roundtable and the former White House chief of staff under President George W. The warnings about a US debt default are earnest and urgent:ĭefault would cause a “Social Security shutdown,” according to Senate Majority Leader Chuck Schumer. ![]()
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