Individual consequences of government debt limit
As the U.S. comes closer its $14.294 trillion debt ceiling, lawmakers faces a vote on boosting the debt limit. Congressional Republicans, however, are promising to oppose the increase unless it comes with guarantees of budget cuts and long-term debt reduction. If a remedy is not reached by August, it will produce an unheard of crisis which will affect every consumer. Source of article – The debt ceiling affects us all by MoneyBlogNewz.
United States can only borrow so much
There is a debt ceiling the government has to work with. It is the amount the country is allowed to borrow to pay off other debts. Increasing the limit has never been a problem. It is always what Congress votes on.
Losses will show clearly for military employees and dependents if this isn’t settled by August. Anyone who depends on Social Security might be at a loss. Medicare may no longer be available. This will drive up health care prices. Taxes, interest and credit rates will all go up.
Spending more than taxes brings in
“Given that the government currently only raises taxes to cover 60 percent of what it spends, being able to borrow means that the services people depend on from the government continue,” was what Stan Collender said. He is a Qorvis Communications partner. Congress needs to increase the limit for taxes to stay low. This will even protect services.
A small return will be given to anyone who buys Treasury Bonds, or T-bills, from the United States government. The purchasers have to experience like they are safe in the loans. Then, small returns can be made. The dollar will lose value if the nation defaults on its loans. Foreign goods will start to cost more. Fuel, electronics and other items would go up in price instantly reflecting this.
Hurting the economy
Those in the government and in the private sector would have to worry about job loss. “We don’t know what will happen because this hasn’t happened before,” Collender explained. “But if the debt ceiling isn’t raised and the government runs out of cash, at some point the president may decide he has to stop doing certain things, like paying government contractors, for example. That may not sound like such a big deal, but it is if someone in your family, or someone you know, is working for that contractor, or for the supplier of that contractor, or if that contractor is a big employer in your neighborhood or your state.”
Wall Street remains confident
There hasn’t been lots of change in the industry. The government debt limit debate isn’t making a difference. Interest rates are very low right now while banks are still lending money. The stock market is doing astonishingly well too.