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If a Debt Deal Isn't Reached by August 2, Do You Fear the Consequences?

Gil Kaufman 2011/07/30 11:00:00
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Every week there's a new thing that could mean the end of the world as we know it that sends us into a frenzy.

Maybe you've already forgotten about the dreaded Y2K virus that turned out to be much ado about nothing, despite the billions people spent making bomb shelters in their backyards and updating their computers to avoid a meltdown. There was the SARS virus that never turned into the black plague as advertised.

And just this year we've had two false alarms on judgment day and, a few weeks ago, Los Angeles' Carmageddon, a catastrophe that never materialized when a stretch of the 405 freeway was shut down for repairs. Pardon us if we're a bit jaded by these "catastrophic" threats.

Now we are just days away from the true final countdown: the debt ceiling. For months we've heard about the dire consequences that will come if Congress fails to raise the debt ceiling for the 75th time since 1962. The deadline came and went on May 16, and then was pushed back several more times until August 2.

Even as Congress scrambles to make that deadline, some in Washington are saying that Tuesday's drop dead has some fudge room and could be a week earlier then true Armageddon. And as both sides dug in over the past few weeks – with President Obama and Democrats refusing to sign off on a plan that had cuts but no new revenue and Republicans preemptively blowing off any talk of a compromise that includes tax increases for millionaire hedge fund managers and oil companies – news channels raised the fears of a global meltdown that would make the last global meltdown look like a picnic by comparison.

What will happen if we blow the deadline?

-- The Treasury Dept. won't be able to pay between 40-45 percent of the 80 million payments it needs to make every month.

-- Millions of active-duty soldiers, veterans and government workers won't be paid, and taxpayer refunds won't go out, while Medicare, Medicaid and Social Security checks will still go out and interest on the debt will be paid.

-- Oh yeah, world markets will go into a massive meltdown as stocks melt down – the Dow Jones was down four days in a row this week – while rates on consumer loans on everything from mortgages to cars, will also skyrocket.

-- The U.S.'s reputation as the world's economic engine will be trashed as our credit rating is downgraded.

Unless none of that happens and this is all another manufactured drama meant to whee-whee up the party's respective bases.

Remember the eleventh hour budget deal from a few months ago?

Neither party has any incentive to be the one that causes the destruction of economic life as we know it, even if it means pissing off its base. This won't happen because it can't happen.

But what might happen is that Republican House Speaker John Boehner will be so mortally wounded by the upstart Tea Party caucus' rejection of his compromise that he could lose his leadership position and President Obama could finally expose the GOP as not just the Party of No, but the Party of No Clue. As in, they have no clue how to lead or how to be caretakers of our nation's financial security.

Ponder this. In his two decades in Congress, Boehner has voted to raise the federal debt ceiling five times, with almost no complaints. Since 2002, in four out of five of those instances he voted to raise it by more than $800 billion. All told, he's voted to raise it by $4 trillion over five year, or the amount the Obama administration is trying to trim the deficit by over the next decade. "So, what's different now? That's right, there's a Democrat in the White House," Cincinnati's CityBeat weekly noted.

You can be sure that a band-aid compromise will be worked out at the final minute that will allow both sides to save face and kick the can down the road for another 10 months.

That's what we should be afraid of. Now's the time for decisive, earthshaking action, not half measures. So don't worry, the sky's not falling … this time.

But next time…
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  • Seeker62 2011/08/01 14:16:25
    No
    Seeker62
    +1
    Here I am on August second and the supposed deal reached last night by the so-called leaders has yet to be approved by votes of Congress. Yet the world is still turning, the lights are still on, there isn't anarchy in the streets.... Amazing isn't it?
  • *Danno* JYD - SWMTPP 2011/08/01 07:03:09
    No
    *Danno* JYD - SWMTPP
  • viper4358 2011/08/01 04:59:14
  • Bcounted 2011/08/01 04:04:37
    No
    Bcounted
    +1
    I don't believe there will be a default on U.S. government payments because of refusal to raise the debt ceiling. Very simply, tax revenues are far more than enough to pay debt payments I would like to see any real numbers that prove otherwise.

    Refusal to raise the debt ceiling will require cutting spending in a big way. How the various financial markets will react to refusal to raise the debt ceiling is unknown therefore predicting how much time needed to recover or how much fear we will have to overcome is impossible to predict One thing for certain, not raising the debt ceiling will provide the best outcome for our posterity.
    Best Wishes,
    Bcounted.
  • Dean 2011/08/01 03:58:21
    No
    Dean
    This just mean that our country is leaning in the right direction. The Bible teaches us that we will have a man to come on the seen with all the answers to these problem. He will come in with peace and change the economy all around the world. He will introduce a one world government, currency and religion. Then he will change his way of doing thing and make you worship him against your will. He is called the beast and he will give his glory to the anti-christ, the devil.
  • brokenwarrior 2011/08/01 03:56:34
    Yes
    brokenwarrior
    +1
    This was sent to me on another site, but I agree, so I'm sharing..

    PLEASE read and forward to all your e-mail contacts! This is getting serious!

    Dear Mr. President, Congress, and Senate;

    I heard you say you will not guarantee Social Security checks if the debt ceiling isn't raised. Why do your scare tactics always relate to Social Security, Medicare, & our Soldiers pay? Why use Seniors, Soldiers, the Sick and the Disabled as hostages? Why not threaten to stop payments to your staff and yourself, Congress and the Senate? Why not say you will take away the retirement benefits and the medical benefits of all the government officials and employees? That would save much more money for our country!!! Why not withhold all payments to our enemies? Why not defund the United Nations? Why not abolish all the wasteful programs designed to give benefits to the undeserving? Just think how much money you could save our country! Instead of threatening to withhold Soldiers pay, Veterans Benefits, Social Security Benefits, and Disability Benefits from those who really have no power to make immediate changes in the debt ceiling, why not hold the paychecks of all government officials--those in the White House, the House of Representatives & the Senate, then see how fast the debt ceiling crisis...&
    This was sent to me on another site, but I agree, so I'm sharing..

    PLEASE read and forward to all your e-mail contacts! This is getting serious!

    Dear Mr. President, Congress, and Senate;

    I heard you say you will not guarantee Social Security checks if the debt ceiling isn't raised. Why do your scare tactics always relate to Social Security, Medicare, & our Soldiers pay? Why use Seniors, Soldiers, the Sick and the Disabled as hostages? Why not threaten to stop payments to your staff and yourself, Congress and the Senate? Why not say you will take away the retirement benefits and the medical benefits of all the government officials and employees? That would save much more money for our country!!! Why not withhold all payments to our enemies? Why not defund the United Nations? Why not abolish all the wasteful programs designed to give benefits to the undeserving? Just think how much money you could save our country! Instead of threatening to withhold Soldiers pay, Veterans Benefits, Social Security Benefits, and Disability Benefits from those who really have no power to make immediate changes in the debt ceiling, why not hold the paychecks of all government officials--those in the White House, the House of Representatives & the Senate, then see how fast the debt ceiling crisis is resolved!!!!! We will be watching for your next press conference or address to the nation to make this public announcement. Think what it would do for your presidential campaign!!! If you agree, repost this & keep it going across the whole USA .
    YES INDEED I TOTALLY AGREE!!!!
    (more)
  • Fef 2011/08/01 03:30:07
    No
    Fef
    +3
    In some ways I hope we don't increase the debt ceiling.

    The media has created a crisis without educating the people.

    Nothing will happen... unless President Obama decides to not pay the debt and Social Security.

    Obama has the sole discretion as to which bills the federal government (Treasury department) pays.

    The feds take in nearly $200 billion each month -- they only need to spend $29 billion on debt.
  • Fef Fef 2011/08/01 03:32:02
    Fef
    +3
    Mr. Kaufman.... the markets reflect the future ability for the government to pay its debt obligations. If the government raises the debt limit and does not dramatically cut spending, the markets will freak out.

    This will signal a continuation of the failed policy of BIG GOVERNMENT.

    We need to cut spending and put caps on future spending.
  • M. Johnson 2011/08/01 03:21:21
    No
    M. Johnson
    +3
    Isn't it funny how Obama has to have his own way all the time. He doesn't put anything together to show he has any intention of lowering spending, but won't sign anything that anyone else does. Doesn't it seem strange that since the Obama's have taken over we can't have our healthcare we have had for years, we can't go to restaurants and have what we want because we may have to many calories, he is trying to take our TV away from us, and he dosn't want us listening to anyone on the radio that he doesn't like. He's choosing Israel's fate for them, he's leaving troops on Libya against what congress say., He doesn't ever listen to what the people want, he just does what he wants. He has taken way too much power.
  • Scott M. Johnson 2011/08/01 03:48:36
    Scott
    +2
    He's a real Stand Up Guy ............................ NOT ! This Low Life is the WORST president in history .
  • viper4358 M. Johnson 2011/08/01 05:03:20 (edited)
    viper4358
    All I can say is 2012 is coming. If Americans are smart they will know what to do. I saw this coming in 2008 but, "Dopes in Chains" managed to get him elected. I hope that this is a wake up call for anyone that has a brain.
  • average Joe blow 2011/08/01 03:04:32
    Yes
    average Joe blow
    +2
    I meant to vote NO , I do not fear the consequences because We are selling ourselves down the river. with our ponzi schemes Its like Bernie Maddoff says The banks know this
    was and is happening to US but its business as usual for them and its largest clients.
  • santa6642 2011/08/01 02:40:38
    No
    santa6642
    +2
    It's pure BS.
  • WannaBeRSC the Contrarian SOB 2011/08/01 02:21:50
    No
    WannaBeRSC the Contrarian SOB
    +1
    Looking forward to it. Let the cowards tremble... I won't.
  • jajanet WannaBe... 2011/08/01 22:24:50 (edited)
    jajanet
    +1
    I think learning what wild potato leaves look like will be a useful skill learning wild pototo leaves skill what wild potatoes look like learning wild pototo leaves skill what wild potatoes look like learning wild pototo leaves skill what wild potatoes look like learning wild pototo leaves skill what wild potatoes look like learning wild potato leaves skill wild edible greens
  • GUY LAKEMAN 2011/08/01 01:49:09
    No
    GUY LAKEMAN
    +1
    IT WONT HAPPEN - THEY ARE TOO GREEDY TO LOSE THEIR JOBS FOR THE SAKE OF THE NATION
  • PCisWrong 2011/08/01 01:43:04 (edited)
    No
    PCisWrong
    +1
    If it really comes down to no agreement by then, I believe our congressmen will pass an extension which will allow them to continue on in the short term. Anyone who would vote that down followed by a default would have committed political suicide...

    Also, as for the moron who wrote the summary for this poll... "Millions of active-duty soldiers, veterans and government workers won't be paid..." You are increasing fear mongering. The treasury has a contingency plan in place for this possibility. This is drastically unlikely.
  • Scott 2011/08/01 01:33:37
    No
    Scott
    +2
    It's more of a point of aggrevation with me . The First Point being : How did we arrive here at this place in time ?
    Number 1 - Obama & Co " Kicked This Can Down The Road " since last year ..... WHY ?
    BLAME ! .......... He " needed " the republicans to blame for this . He had Full Control of congress last year and could have rammed it through with very little trouble but needed a villian for his re election in 2012 .
    Number 2 - " EXTORTION of the elderly and disabled " . He offers NOTHING in the way of a plan or even an idea ( he is MIA , Missing In Action ) and has No Plan ! His Party the Dems. have become the Party Of NO ! They ( and Obama ) threaten with " Dead On Arrival " and " Don't Bother " because we will not even look at it . Obama threatens a " VETO " if he don't get his way.
    Now we get to the EXTORTION part . He goes on TV to " THREATEN OLD PEOPLE " thinking that they will flood the phone lines in his favor ................... DIDN'T WORK ! It backfired and 40,000 + calls , angry callers were pissed !

    This is TYPICAL OBAMA SMOKE & MIRRORS ! The American People are getting wise to him ( at least most are ) and I feel I am in the middle of a Circus .
  • abubincrazy 2011/08/01 01:27:28
    No
    abubincrazy
    +3
    It's a crock of sh@t.
    Another phony crisis invented by the socialists to scare us into giving them several trillion more of OUR dollars.
    F@CK them.
  • Scott abubinc... 2011/08/01 01:35:44
    Scott
    +2
    BRAVO !
  • abubinc... Scott 2011/08/01 01:47:03 (edited)
    abubincrazy
    +2
    Yo, man.
    We battle-staters have to stick together.
  • Independent Thinker 2011/08/01 01:06:00
    No
    Independent Thinker
    +3
    This whole episode is absolute foolishness. The debt will be paid; we have the money.

    The issue is that each day we dig ourself deeper in debt.

    Eventually there will be a collapse; of this, we can be sure! There will be a price to pay for all this over-the-top spending. It happens in individual families and it will happen to governments too. The US keeps printing money; it is a game but eventually that game will run it's course.

    Do I fear the consequences? No...but the consequences for everyone (even those who caused this mess) is definately on the horizon.
  • Scott Indepen... 2011/08/01 01:40:56
    Scott
    +3
    According to the US Govt. ........... Social Security has 2.6 TRILLION DOLLARS in its trust acct. That's enough , if we do NOTHING , to pay for Social Security " For The Next 25 Years " !
    WHY is this " dispicable human being " being allowed to threaten old people and the disabled ? This is FRAUD !
  • Indepen... Scott 2011/08/01 02:41:30
    Independent Thinker
    +1
    Mmm! Interesting post! Obviously you are not a President Obama fan.

    That being said ...I agree there is plenty of capital to meet the needs of the people and this "show" is to shake up people to scare them into seeing the situation the dems way.

    Most people are aware of these tactics (at least the people I know). They are from all philosophies and different strata so as a group most are oh so disgusted with all these "playground" tactics.

    The part that really bugs me is that these individuals do not believe that the common citizen sees through this wacky behavior. In the end ....the biggest losers will be those who tried to play this game.
  • Scott Indepen... 2011/08/01 03:37:04
    Scott
    +1
    To say that I am less than impressed with our president is an understatement . To say that he " disgusts me " is a more acurate assumption . When he went on TV and tried to scare the elderly and disabled into Putting The Pressure On their congresspersons was a NEW LOW even for him ! This is what we would call EXTORTION and if it were done by anyone else would be a crime .
  • story101 2011/08/01 00:32:59
    No
    story101
    +1
    We've already struck the ice berg and everyone is just in denial.

    The sad part is that unlike the Titanic we can stil save this ship. We would just rather fight for space on the lifeboats instead.

    Instead we have gamesmanship by our two ruling parties on how to figure out the best way to make the other guys look responsible and irresponsible.

    But no, some deal with get done. I hope it is the short term one to cover this budget year and they do next year's budget properly with a debt ceiling agreement. If not I hope that Obama does invoke the 14th amendment scam.

    By the way, if you believe the 14th amendment as it applies to federal debts then we should impeach every congressman and any executives that voted for or signed a budget that authorized expenditures this year in excess of our ability to pay given the debt ceiling in place at the time.

    We should not be in the place we are today with $14 trillion in debt and no honorable political parties.
  • commieblaster77 2011/08/01 00:14:49
    No
    commieblaster77
    +3
    NO nothing more than commiecrats using scare tactics to manipulate people. They always wait til the last minute and tell Americans "the sky will fall if we don't do this" They are OUT to destroy our economy and ALWAYS have been .This IS the evil agenda commiecrats have pursued for decades and now it is getting close to becoming a reality!!
  • Scott commieb... 2011/08/01 01:52:52
  • commieb... Scott 2011/08/01 02:11:36
    commieblaster77
    +2
    Agree 100% they ARE PURE EVIL and i truly despise them and their communist ideology!!!
  • Scott commieb... 2011/08/01 02:18:53
    Scott
    +1
    Me Too ! It's up to us to spread the word " AND WE ARE NOT ALONE " !
  • Rocky 2011/08/01 00:01:53
    No
    Rocky
    +5
    When Rahm Emmanuel used the phrase..."We never let a good crisis go to waste!" I knew that others would follow suit...and that is exactly what both sides of the House have been doing for close to one hundred years, creating one crisis after the other, just so THEY can control the Masses! The latest Members of the House and Senate are but the latest to make use of a "Good Crisis!"
  • CuresCancer 2011/07/31 23:49:53
    No
    CuresCancer
    +3
    This scares me more. Much more.
  • BloodMist 2011/07/31 23:49:51
    No
    BloodMist
    +2
    Nah they're going to wait until the last minute on purpose to announce whatever they already got, in hopes of making the house and the senate look like they're still important.
  • izzybean 2011/07/31 23:42:01
    No
    izzybean
    +4
    I am a bit tired of beign told Its a crisis, well a true crisis would probably be the death of a lot of people, or some such sort. Why am I supposed to be afraid? of what? Is the sun not going to come up on Aug 3, will the moon leave its orbit and move to mars? Will dogs and cats change personalities? Will my work shoes suddenly be a different size? I figure we are being played as suckers by a news media that cannot or will not cover things being done right now by this admin because the news media supports obama to the bitter end. If someone in the bush admin had taken ten million dollars bought weapons then sold them to mexican drug cartels there would be massive protests and such, but now not a word. And why is it okay for the state of texas to lose eighteen coal fired electrical generating plants on the first of Jan? because the epa wants to shut them down. And why is it okay for me to pay a tax on my healthcare? And why is it okay for me to pay a 23 percent tax on my electric bill? Crisis? The only crisis in this country is the slide to socialism, if 39 percent of americans beleive that their children will have a lower standard of living than their parents, thats a crisis.
  • Scott izzybean 2011/08/01 01:55:18
    Scott
    +1
    BINGO , You Got It !
  • Steelshrt 2011/07/31 23:19:51
    No
    Steelshrt
    +1
    Mehh!!! Life goes on.
  • Gordon 2011/07/31 23:12:22
    No
    Gordon
    +3
    The show going on in DC has nothing to do with correcting the problems we have. It all has to do with how they're going to justify doing business as usual. Any spending cuts proposed are insignificant and subject to whatever the next congress wants to do. None of the ridiculous spending is being cut, and Obama gets another credit card with $2.8 TRILLION of our money to waste.
  • Scott Gordon 2011/08/01 01:56:08
    Scott
    +3
    You Got It , Gordon !
  • Isisdron 2011/07/31 23:10:27
    The debt ceiling crisis is making me feel ...
    Isisdron
    +2
    anxious. I hate politicians.
  • Undercover Broad 2011/07/31 23:03:05
    Yes
    Undercover Broad
    +2
    What I fear most is our AAA credit standing with banks and fact that lowing this rating would cause interest rate increase for all of us.

    I don't know about y'all, but I want an increase in taxes and interest rate both at the same time. Taxes will have to raise to pay off the debt, but a interest rate hike is avoidable.
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