What Happens if the US Defaults on Its Debt?

debt default

Time and money are two things our country doesn’t have enough of right now.

With each passing day, we come closer and closer to once again reaching our debt limit, also known as, the maximum amount of debt that the US can have outstanding.

A few months ago, around mid-October, we came days away from a government default as we inched closer to reaching the previous debt ceiling limit.

An extension was granted due to the House of Representatives vote, which temporarily increased the ceiling by $480 billion.

Now, we are less than one month away from completely maxing out this threshold once again, punting the debt debate until December 3rd.

This country will face many adverse effects if we cannot arrive at a sensible solution in time.

For one, government-funded benefits such as Social Security could be in jeopardy.

In a Wall Street Journal op-ed, US Treasury Secretary Janet Yellen stated:

“In a matter of days, millions of Americans could be strapped for cash. We could see indefinite delays in critical payments. Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays. America, in short, would default on its obligations.”

If the Federal government exhausts all of its available resources, there may not be enough money to make payments towards programs such as veteran benefits and services and our national defense.

All of this could potentially lead us to a partial government shutdown or delays in some government payments.

And like nearly every other issue this country has faced lately, the divide between both parties has yet to come to an agreement on the best way to solve this.

US Treasury Secretary Treasury Janet Yellen believes the debt ceiling should be increased with or without Republican support.

“If Democrats have to do it by themselves, that’s better than defaulting on the debt to teach the Republicans a lesson.”

There never really seems to be a good time for the government to default on its debts.

The US is essentially maxing out its credit card, again and again.

In the late 1980s, the federal debt reached $3 trillion— the only decade in history in which the national debt tripled.

Today, in November 2021, our federal debt stands at over $28 trillion.

The last thing we need this holiday season is another fire to put out.

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