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A US default would be so catastrophic as to suggest a new depression looming.
The US can keep the spending and taxes the way it currently does simply because treasury bonds are considered a very safe investment, so in a flight to safety the US receives a good chunk of financing to keep things going.
With a default, the US is not the safe haven for investments anymore.
This would mean tax hikes and benefit cuts right now. As is, people currently retired getting their income cut by half or more, and people's taxes going up by some 10% at least. Not to mention, of course, the mounting uncertainty. Which is why this whole thing is so ridiculous. Supply side economics are all about economic stability fostering certainty and therefore investment. That is the most basic tenet of it. So in the name of supply side economics, Republicans decided to introduce that which is normally only applicable to poor 3rd world nations: political risk.
If only American media had the balls to:
- point out how catastrophic this would be
- point out that the ceiling increase is in order to pay for the budget that the Republicans already passed
things might be different.
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