As the U.S. approaches its $14.294 trillion debt ceiling, congress faces a vote on boosting the debt limit. Congressional Republicans, however, are threatening to oppose the increase unless it comes with promises of spending budget cuts and long-term debt elimination. If a compromise isn't reached by August, the economic ripple will affect every customer. Source for this article - The debt ceiling affects us all by MoneyBlogNewz.
The debt ceiling is the maximum limit the government is allowed to borrow to pay its current debts. Increasing the limit has never been an issue. It is always what Lawmakers votes on.
Losses will show clearly for military employees and dependents if this isn't settled by August. Those dependent on Social Security might be left out in the cold. Medicare may no longer be accessible. This will drive up health care costs. This would increase credit and rates of interest. It would also increase taxes.
Not enough in taxes
"Given that the government currently only raises taxes to cover 60 percent of what it spends, being able to borrow means that the services people depend on from the government continue," was what Stan Collender said. He is a Qorvis Communications partner. Taxes may go up drastically with fewer services if Lawmakers does not increase the limit.
T-bills considered secure, for now
A small return will be given to any person who buys Treasury Bonds, or T-bills, from the U.S. government. As long as the purchasers are assured the loans are safe, they are willing to trade security for small returns. The dollar will lose value if the nation defaults on its loans. Foreign goods will start to cost more. Fuel, electronics and other items would go up in price immediately reflecting this.
Hurting the economy
It is possible that many jobs could possibly be lost in the government. The private sector has reason to be concerned too though. "We don't know what will happen because this hasn't happened before," claims Collender. "But if the debt ceiling isn't raised and the government runs out of cash, at some point the president may decide he has to stop doing certain things, like paying government contractors, for example. That may not sound like such a big deal, but it is if someone in your family, or someone you know, is working for that contractor, or for the supplier of that contractor, or if that contractor is a big employer in your neighborhood or your state."
Still positive on Wall Street
There hasn't been lots of change in the market. The government debt limit debate is not making a difference. Rates of interest are very low right now while banks are still lending money. The stock market is doing astonishingly well too.