Washington, DC -- Congressman Eliot Engel (D-NY-17) said failure to raise the debt ceiling would have dire consequences for the American economy, and around the world, with chilling affects on each and every family in America, and across the world. “If Congress plays politics and allows the unthinkable to happen,” he said, “we could experience a global depression the likes of which has not been seen for generations.

“A dangerous game is being played in Washington, and one that should not be played at all. It is true we need to address both government spending and revenue issues, but it is absolutely unnecessary to tie these delicate negotiations to an increase in the debt ceiling.  Seven increases in the debt ceiling occurred under President George W. Bush, and no conditions were tied to these increases.  This is pure politics, but with dire consequences.  It is a gamble not worth making.  Let us raise the debt ceiling simultaneously to holding these important budgetary discussions – we are capable of doing two things at once.  Now, if we don’t reach an agreement before the end of the month, the government will default on its previous obligations, and the consequences will be horrendous,” said Rep. Engel, who has already voted in favor of an increase in the debt ceiling without conditions.

Much of the conversation over these past weeks has centered on the catastrophic consequences for the economy.  What has been overlooked in the discussion is how a default on our debts would impact the lives of everyday American citizens. Should the government default, American families would see the following:

1 – Interest Rates.  The U.S. economy would slow to a virtual standstill, with the dollar plummeting, and the credit rating spinning down the drain. Interest rates would skyrocket. New home loans, mortgages, credit cards, car loans, student loans, etc. would have a much greater chance of rejection, and rates would go through the roof.  It would result in higher payments, and less money circulating.  It would burden already-cash-strapped families in need of credit and grind our economy to a halt.

2 – Payments. Government paychecks and benefit checks would stop.  Military service members, including those currently in combat, would not get paid.  Social security and pension recipients would not get their checks.  Government employees (including teachers, firefighters, and police officers), and doctors in need of Medicare reimbursements would not receive their salaries, or their compensation.

3 – Closures.Government offices would close and employees would be furloughed.  Vital replenishment of food and weapons for our troops overseas would be halted. Anyone seeking a passport, social security assistance, care at veterans hospitals, or simply visiting National Parks and Landmarks, would be unable to do so. 

4 – Layoffs.  Unemployment is already too high, and a default would make it worse.  Unemployment would surge as businesses lose credit, and thus be forced to cut back on payroll.  American families would lose more buying power and have to cut back even more than they are today.  The end result would be a double-dip recession or perhaps a full-fledged depression.

5 – Pensions.  It only took the stalemate in talks to send the stock market crashing.  The Dow Jones closed down 150 points yesterday.  Should the country actually default, the stock market could face a day that rivals the dark days in 2008, 2001, 1987, and even potentially 1929.  Pensions for millions are tied to the stock market, and lifetimes of work could be lost in a blink of an eye.  Pensions are tied to the health of the stock market, if the market crashes, millions of Americans will watch their nest eggs vanish.

“This is just the tip of the iceberg, the longer we stay in default the more catastrophic the consequences.  I refuse to believe our government can be that reckless.  The President has gone miles towards making a deal.  My colleagues in the Republican Majority refuse to budge a single inch for fears that their Tea Party caucus will take their ball and go home.  They chose to come to Washington when they ran for election, and the job description includes acting for the good of the country.  The time for rhetoric is over, it is time the Majority started being responsible and acted like leaders,” said Rep. Engel.

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