Could a US debt default unleash global chaos?

[Social Media]

The US government is currently engaged in what could be one of the most costly games of chicken in history.

If Democrats and Republicans do not agree to allow the US to borrow more - or, in their language, raise the debt ceiling - the world's biggest economy will default on its $31.4 trillion (£25tn) debt.

They have to reach an agreement by the ominous sounding "X-date" of 1 June.

If they do not, Chancellor Jeremy Hunt has warned the impact would be "absolutely devastating".

So what would that mean for the economy - and you?

[Jingthing]

Yes it could.

Crashing dollar. Crashing stock market. Social security checks will be prioritized to be paid but not indefinitely. 

It's the republican party's fault.

They are financial terrorists.

More toxic than foreign enemies.

Raise the debt ceiling (money already spent) and negotiate the budget separately as is supposed to be done.

 

“Debt-Limit Terror” Is No Way to Run a Superpower | The New Yorker

Quote

 

On the latest round of the Republicans’ dangerous game.

By Susan B. Glasser

May 18, 2023

What can you say about a week in American politics when the major breakthrough was that the two parties agreed to stop talking about talking, in order to actually start talking? In Washington, where, for months, President Biden and congressional Republicans have been hurtling toward a confrontation over the G.O.P.’s refusal to raise the debt ceiling without major concessions from Democrats on federal spending, the beginning of formal negotiations aimed at averting a disastrous government default counted as big news. For the rest of the world, it was merely a sign of the capital’s extreme dysfunction, and a reminder that America’s messed-up politics constitutes a geopolitical crisis as well as a domestic one.

 

 

Edited May 19, 2023 by Jingthing

[Tug]

Absolutely it would creat chaos and cost the republicans dearly in my humble opinion it would only benefit Americas enemies 

[vinci]

its not going to happen, the republican just pretend to stretch it to the end to get some deal out of it

[JonnyF]

2 hours ago, Jingthing said:

Yes it could.

Crashing dollar. Crashing stock market. Social security checks will be prioritized to be paid but not indefinitely. 

It's the republican party's fault.

They are financial terrorists.

More toxic than foreign enemies.

Raise the debt ceiling (money already spent) and negotiate the budget separately as is supposed to be done.

 

“Debt-Limit Terror” Is No Way to Run a Superpower | The New Yorker

 

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

[Jingthing]

9 minutes ago, JonnyF said:

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

Do that at budget time 

Don't threaten to blow up the world economy.

Also when Trump was in power with his atrocious  tax cuts for the rich you didn't hear a peep from his fascist party about deficits.

Also they are such vile hypocrites. They actively oppose more IRS agents that are needed to audit the complex taxes of the wealthy where the take ins would be massive and help reduce the deficit.

Don't even bother to assert the fascist party actually cares about deficits.

Thru obviously do not.

[Jingthing]

47 minutes ago, Tug said:

Absolutely it would creat chaos and cost the republicans dearly in my humble opinion it would only benefit Americas enemies 

They're so cynical that they think they will be able to blame the democrats because it would happen on Biden's watch.

[Jingthing]

41 minutes ago, vinci said:

its not going to happen, the republican just pretend to stretch it to the end to get some deal out of it

It's a bigger risk to happen this time because trump wants it to happen and speaker McCarthy can lose power over just one vote. Their extremist wing including mad woman Marjorie Taylor Greene are very capable of mad actions.

[Jingthing]

I said before in the event of a debt default that social security checks would be prioritized which I have heard before.

 

Well. Maybe not.

 

According to this the government may not have the authority or ability to prioritize like that and if they did it might be challenged in court.

 

So what this means is that Americans might not get their June checks or maybe they'd get a partial check.

 

That could be serious for retired expats here that use the income method.

 

https://www.washingtonpost.com/business/2023/05/18/debt-ceiling-default-deadline-payments/

 

 

Edited May 19, 2023 by Jingthing

[Jingthing]

Describing what the republican party is doing as financial terrorism is (sadly) not hyperbole.

 

From their ex-president who is leading to be nominated again in 24:

 

Quote

"REPUBLICANS SHOULD NOT MAKE A DEAL ON THE DEBT CEILING UNLESS THEY GET EVERYTHING THEY WANT (Including the 'kitchen sink')," the former president wrote. "THAT’S THE WAY THE DEMOCRATS HAVE ALWAYS DEALT WITH US. DO NOT FOLD!!!"

Truth Social

[Chomper Higgot]

Republicans are handing the Chinese a gift they could not have even dreamed of.

 

China’s plan to establish the Yuan as a ‘reserve currency’ are aging momentum.

 

https://www.exchangerates.org.uk/news/38037/2023-04-27-yuan-eclipses-dollar-in-chinese-cross-border-transactions-for-first-time-threat-to-king-dollar/amp

[Tug]

14 hours ago, JonnyF said:

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

Ahh I think you are mistaken most of this is on account of trumps tax scam so that would be trumps ineptitude 

[billd766]

18 hours ago, Tug said:

Absolutely it would create chaos and cost the republicans dearly in my humble opinion it would only benefit Americas enemies 

Some of whom are stalwarts of the GOP. 

 

The current line up of the GOP is IMHO the biggest problem that the USA faces today.

[wwest5829]

19 hours ago, JonnyF said:

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

Good to know the 2017 Republican tax reduction primarily benefitting the wealthy and corporations did not add to the income shortfall.

[wwest5829]

I am done with this … if I was ever open to a radical Republican House minority holding me hostage … Pay the damn bills as required by the U.S. Constitution (how is that for “original intent”!). Then, yes let us see your Republican budget! The President presented his in March … where is your concrete proposal for addressing spending … what do you want restricted? Cut? What tax raises do you propose to pay for the difference in income and spending. Put up or get the hell out of the way of those of us that want progress not BS!!!

[Purdey]

23 hours ago, Social Media said:

Chancellor Jeremy Hunt

Didn't realize the Americans had a Chancellor. Good for them! 

[mrfill]

File under old chestnut...

 

https://finance.yahoo.com/news/us-presidents-raised-debt-ceiling-110017986.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAMDaepNeSaP4XMrzZ7IEIAi7IfL1UW7FgRBcDdq3EM5PBmvNQ-wjLFIAbDMamgUtOmxwM886FWQVCquhfogPReYhrOesFx21O35VcTeGzrFe7Snc8DdSrAkwMP45nENmWLquEXQ3nUhCP8kOCOgvCjE2JqCx-tY04m10y2C2ZF4i

[placeholder]

20 hours ago, JonnyF said:

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

Yes, that Biden and his fiscal ineptitude.

Federal budget deficit hits 6-year-high in Donald Trump's first fiscal year as president

The federal budget deficit has surged to $779 billion in fiscal 2018, its highest level in six years, as President Donald Trump's tax cuts caused the government to borrow more heavily in order to cover its expanded spending.

The Treasury Department said Monday the deficit climbed $113 billion from fiscal 2017. Debt will likely worsen in the coming years with the Trump administration expecting the deficit to top $1 trillion in 2019, nearly matching the $1.1 trillion imbalance from 2012.

The deficit worsened because tax revenues are not keeping pace with government spending. 

https://www.cbsnews.com/news/federal-budget-deficit-hits-6-year-high-in-donald-trumps-first-fiscal-year-as-president/

[Mickeymaus]

This shows who is guilty... 

 

https://www.cato.org/blog/debt-ceiling-kabuki

 

[placeholder]

7 minutes ago, Mickeymaus said:

This shows who is guilty... 

 

https://www.cato.org/blog/debt-ceiling-kabuki

 

Actually what it shows is that some people suffer from amnesia. It's clear you don't recollect what happened in late 2008 just before Obama took office?

[placeholder]

8 minutes ago, Mickeymaus said:

This shows who is guilty... 

 

https://www.cato.org/blog/debt-ceiling-kabuki

 

It's clear that some people have trouble reading a graph

 

The Legacy of the 2001 and 2003 “Bush” Tax Cuts

The biggest tax policy changes enacted under President George W. Bush were the 2001 and 2003 tax cuts, often referred to as the “Bush tax cuts” but formally named the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).  High-income taxpayers benefitted most from these tax cuts, with the top 1 percent of households receiving an average tax cut of over $570,000 between 2004-2012 (increasing their after-tax income by more than 5 percent each year).  Despite promises from proponents of the tax cuts, evidence suggests that they did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.

https://www.cbpp.org/research/federal-tax/the-legacy-of-the-2001-and-2003-bush-tax-cuts

 

 

[Mickeymaus]

3 minutes ago, placeholder said:

It's clear that some people have trouble reading a graph

 

The Legacy of the 2001 and 2003 “Bush” Tax Cuts

The biggest tax policy changes enacted under President George W. Bush were the 2001 and 2003 tax cuts, often referred to as the “Bush tax cuts” but formally named the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).  High-income taxpayers benefitted most from these tax cuts, with the top 1 percent of households receiving an average tax cut of over $570,000 between 2004-2012 (increasing their after-tax income by more than 5 percent each year).  Despite promises from proponents of the tax cuts, evidence suggests that they did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.

https://www.cbpp.org/research/federal-tax/the-legacy-of-the-2001-and-2003-bush-tax-cuts

 

It cannot continue like this but it continues like this. 

[StayinThailand2much]

This is all boll****. Even if they were not to agree on raising the debt ceiling within the next two weeks or so, the government would still have means to keep on spending, not ideal, but possible. And the "X-date of 1st June" is not the exact day when 'the money runs out' either...

Edited May 20, 2023 by StayinThailand2much

[cncltd1973]

22 hours ago, JonnyF said:

Holding Biden to account for his fiscal ineptitude is not terrorism.

 

Or fascism, before you drop that little chestnut in...

costly wars started by Republicans and tax cuts for the rich...

 

short memories can be so convenient

[vandeventer]

51 minutes ago, StayinThailand2much said:

This is all boll****. Even if they were not to agree on raising the debt ceiling within the next two weeks or so, the government would still have means to keep on spending, not ideal, but possible. And the "X-date of 1st June" is not the exact day when 'the money runs out' either...

The government still rakes in a lot of money from tax every month. Biden knows this that's why he is holding out for every Penney he could get. 

[billd766]

1 hour ago, vandeventer said:

The government still rakes in a lot of money from tax every month. Biden knows this that's why he is holding out for every Penney he could get. 

But is it enough to pay the bills?

 

Perhaps if the rich were taxed at the same rates as the poor the national debt could be reduced.