By Andre Michael Eggelletion
Here is some of what would happen if the Republicans in Washington refuse to allow the debt ceiling to be raised and forces the United States to default on its sovereign debt:
(1) The United States would lose its triple AAA credit rating, thereby causing a significant increase in the difficulty to attract foreign capital.
(2) The Federal Reserve would have to print money to cover the shortfall in revenue needed to run the government, and thereby hyper-inflate and destroy nearly all of the dollar's value.
(3) Interest rates would soar to defend the crippling of the dollar caused by the Fed drastically increasing the money supply and nation going into sovereign debt default.
(4) Unimaginable legal problems would then ensue as the Treasury has to decide who gets paid and who gets stiffed.
(5) The stock market would see a 1000 point drop in a single day, as money is transferred into precious metals and cash reserve.
(6) The price of precious metals would spike to astronomical levels.
(7) Bond prices would collapse as yields soar to entice foreign capital
(8) Government payments to all parties, except foreign bond holders, would cease or be cut by 60 to 80 percent
(9) Federal, State, and Local agencies would implement an across the board freeze on all expenditures, including salaries.
(10) Citizens on supplemental income, such as Social Security and Medicare would severely cut their spending, and the ripple effect would be felt throughout the economy. All businesses from the coffee shop, to the car dealership and hardware store would see a catastrophic loss of business.
(11) Those businesses and the vendors supplying them that initially survive would have to begin massive lay-offs and downsizing to stay alive.
(12) College students on grants and loans would end up dropping out due to their inability to pay dramatically increasing tuition and rent costs, and return home help their families.
(13) Those states, cities, and industries that depend on tourism would see a crushing loss of revenue, requiring many to declare bankruptcy.
(14) The government could be forced to privatize much of the nation’s property and transportation infrastructure to collect badly needed revenue.
(15) A period of draconian austerity or some serious belt tightening would have to be imposed while the government restructures its debt.
(16) The United States may have to turn to the International Monetary Fund for structural adjustment loans and other assistance. The IMF would then impose the same programs of privatization of our infrastructure, liberalization of our capital markets, and austerity that have been offered to Third World countries and defaulting nations in the European Union.
Republicans should be ashamed of themselves over the fact they are a big part of the reason why this nation is in the financial shape it is in right now. They spent money like sailors during the Bush years and told us that deficits didn’t matter. They pushed for war in Iraq, which turned out to be the greatest strategic blunder in American history. They deregulated our financial system, and allowing commercial banks to become little more than gambling houses, and allowed corporations to move our jobs overseas. Now they want that same public that they abandoned to pay for the excess and malfeasance of those who they allowed to game the system. If the president refuses to force the beleaguered public pay, then the Republican leadership in Washington has said they will obstruct raising the debt ceiling and allow this great country’s reputation and credit rating to be irreparably damaged. In other words, they are willing to allow an economic perfect storm to ravage this entire nation just to make President Obama look bad and assure more fruitless tax cuts for millionaires and billionaire who don’t need it.
It takes a cold hearted person to ask America’s elderly to take cuts in their Social Security and Medicare benefits, after they have worked hard all their lives and paid into the system, and do it at a time when the costs of living are higher than they have been since the Great Depression. Our elderly are being asked to choose between paying for food and medicine, and paying their rent. For what… so rich people can get another ineffective tax cut?
The GOP is actually callous enough to satisfy the avarice of the rich at this challenging time largely of their own creation, that they have called for elimination of vitally needed programs such as day care, food stamps, and virtually every established measure of benevolence in America. Their proposals are not only shameful and unfair; they are against the will of a vast majority of the people of this country, as polled by Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers, Second Quarter 2011.