Greetings, my friends. We are all interested in the future, for that is where you and I are going to spend the rest of our lives. And remember my friends, future events such as these will affect you in the future. You are interested in the unknown—the mysterious. The unexplainable. That is why you are here. And now, for the first time, we are bringing to you, the full story of what will happen on that fateful day. We are bringing you all the evidence, based only on the secret testimony, of the miserable souls, who have studied this terrifying ordeal. The incidents, the places—my friends, we cannot keep this a secret any longer! Let us punish the guilty! Let us reward the innocent! My friends, can your heart stand the shocking facts of Plan 9 from Republican House?!
If so, Matt Yglesias has a story to tell you. Yes, I was being silly above, with the help of the great Ed Wood. But the truth is that if the Congress does not raise the Debt Ceiling, it is going to be bad. Really, if your heart can stand the truth, click on over to Yglesias’ article. But let me give you the most basic information. If we hit the Debt Ceiling, we will see a 7% hit in the GDP of this country. This represents about ten million currently employed people losing their jobs. This represents as big a hit as the worst of the Great Depression.
But there’s more! That’s just the primary problem. As with everything in the economy, there are lots and lots of feedbacks:
If the government can’t pay its bills on time, then some of the people to whom it owes money—whether that’s a construction company, a grandma on Social Security, a doctor treating Medicare patients, a public school expecting Title I funding, a student awarded a Pell Grant, whatever—won’t be able to pay their bills on time. That’s going to mean a rise in missed payments on mortgages, car loans, and credit cards. That means bank failures and sharply reduced credit availability even for people who aren’t specifically counting on a check from Uncle Sam. Debt financed investment—construction projects, vehicle purchases, small business expansions—will likely grind to a halt as nobody wants to lend out new money until they’re sure they’re getting paid what they’re already owed. That will create a secondary collapse in incomes, and an additional wave of business and citizens unable to pay their bills.
I know a lot of people think I am too worried about this. Actually, I’m tending to think now that we aren’t that likely to hit the Debt Ceiling. But this is so bad that we shouldn’t even be seriously talking about it. Right now, I think there is maybe a 10% chance. And that is terrifying.