The partial government shutdown continues as frequent talks and negotiations between U.S. officials fail to bring compromise and the threat of the first U.S. default looms.
Furloughed workers hoped for a decision when news of President Obama’s phone call with House Speaker John Boehner surfaced. Unfortunately, the only product of the conversation was an agreement to continue negotiations between Republicans and the president.
The threat of a first-ever U.S. default looms as Oct. 17 quickly approaches. What exactly will happen if the U.S. can’t pay its debts? No one is certain, but scholars and economists have an idea.
Most U.S. debt comes in the form of bonds, and foreign countries invest money in these bonds.
In a default, the U.S. would stop paying money it owes to the U.S. Treasury bondholders and consequently, the value of those bonds decreases.
Many economists predict that global interest rates would rise and world markets would plummet because of the abundance of prior investments from foreign countries.
Because of revenue collected through various taxes, however, the U.S. could continue to pay some bills for a short time. According to the BBC, the U.S. Treasury receives around two million bills each day, and the Bipartisan Policy Center said the government would only possess 68 percent of the funds required to pay next month’s bills.
The most expensive payments for the government are rapidly approaching. On Nov. 1, the U.S. will need to pay $18 billion toward Medicare, $25 billion for Social Security and $12 billion for military and veteran benefits. The next interest payment for U.S. debt occurs Nov. 15.
The House is currently awaiting a vote on a recent Republican spending plan that includes an increase in the federal borrowing limit.
Proposals are also in circulation in the Senate that include minor changes to Obamacare. The provisions would end the tax on medical devices and change the definition of a part-time worker in order to avoid requirements for businesses to provide health coverage to employees.
President Obama recently signed a bill providing death benefits for military personnel. The Fisher House Foundation charity is providing payments up to $100,000 until the federal government is reopened.
Not only will the shutdown and the possible default have a vast effect on the image of the U.S. as a leading economy, but it may also further diminish citizen approval of the job Congress is doing.
KSU student John Pledger said he does not believe the government has the people’s best interest in mind anymore.
“I feel like the government is on the side of large corporations,” said Pledger. “[Government officials] are looking out for themselves. At no point in politics should you say we will not negotiate.”
Approximately 800,000 federal employees are currently furloughed.