This morning, a group of Democratic senators came together to warn the country about the disastrous consequences of defaulting on our debt for the first time in U.S. history. Their Republican counterparts are still denying the country would default if the debt ceiling isn’t raised by Aug. 2, and insist the Treasury has plenty of money to pay all of our bills. Several GOP leaders have suggested we “pay China first” and fund the military, but leave all other government programs and services on the chopping block.
Sens. Chuck Schumer (NY), Ben Cardin (MD), Mark Begich (AK), and Chris Coons (DE) illustrated the catastrophic effects of the Republican strategy:
“A default would pull the rug out from each and every family in this country for no good reason,” Schumer said. He pointed out that if Treasury chooses to pay Social Security, Medicare and Medicaid, military troops and interest on the debt, there would be no money for anything else. “We don’t have a dime for student loans. We don’t have money for the FBI,” he said. “You don’t have anyone at the border. No one inspecting food.”
The $172 billion the government will have on hand on Aug. 3 is insufficient to meet all of our national needs and will leave us facing impossible choices. Paying for Social Security, Medicaid, and Medicare, for instance, will take up $100 billion. That would leave a mere $72 billion to do everything else — including pay the interest on our debt and fund the military. As a result, many essential government services will be immediately shut down:
“We wouldn’t have a dime for Student loans, the FBI, Cancer Research, IRS refunds, or border patrol agents,” Schumer noted. “What from this list are you going to remove to fund these jobs that keep America safe?”
On Aug. 3, the government’s savings account will be nearly empty and President Obama would be relying on daily tax revenue to pay the nation’s bills. But there won’t be enough — in fact, there would be a $134 billion shortfall in August alone, according to an independent analysis confirmed by a former senior Treasury Department official in the George H.W. Bush administration.
Sen. Coons summed up the situation: “This is the most predictable financial disaster in our history. Let’s avoid it.”