With all this talk about debt, default and ceilings one of the most important questions has been ignored: how will this affect you? Political posturing has become the story of the day, with negotiations being reported like sports statistics by excited commentators.
Unfortunately, there are actual consequences if the debt ceiling is not raised: higher interest rates, more restrictive loan terms, cuts to socials services, and a possible stock market plummet. This is not a sport. The consequences are much more dire.
Let me explain: The debt ceiling is simply the bill for the spending that Congress has already approved and spent in the previous fiscal year, according to PBS. It is like the check at the end of a meal from a restaurant. When we eat the food and enjoy the environment, we pull out our wallets and pay the amount owed. The debt ceiling is simply the country paying for the supper it has already eaten.
The economic repercussions of skipping out on the bill are not completely predictable since the United States in its history has never pulled a “dine and dash.” Some of the problems that could arise from defaulting on our bills would include a downgrade of our national credit score (the judgment of how good we are for any money that we borrow, or our trustworthiness) as well as sour our reputation as a safe harbor for international financial investment, according to Reuters. It could also lower the trustworthiness of many states’ credit, making it harder for struggling states to get the assistance they need to strengthen their communities.
How would it affect us here in Washington State? Right now Washington State gets some of its funding from the Federal Government. If the Federal Government defaults and has to pick whether to pay the electricity or the water bill, then funding to states will most likely be first on the chopping block. In Washington State we receive federal money to support essential services like college grants, K-12 education, Head Start, job training programs, and other social services that many of us rely on to get back on our feet.
With many of us still struggling to find good work and to find safe, reliable childcare, we cannot afford the loss of Federal money in our community. We have already seen the state budgets shrink with drastic cutbacks in services. We can’t afford to let ideology overrule rational thought.
We’ve been in this fight before, but things are different this time.
The fight about the debt ceiling has been stooped in willful ignorance of history and an attitude that is too optimistic about the possible problems. Under President Ronald Reagan, the debt ceiling was raised over a dozen times. Under President George W. Bush, the debt ceiling rose more than six times. This is truly a chosen crisis.
The crisis was created because members of Congress wanted to attach spending cuts to a normally routine legislation. The members of Congress have decided to gamble with our economic well-being to prove a political point driven mainly by ideology about the role of government.
But here are the facts. We could end this problem with a simple, clean bill to raise the debt ceiling. We could stop with the posturing and the speeches and simply get it done in order to avoid economic uncertainty. When the check comes, you pay it. It is not that complicated.