If you find persuasive the analogy of the U.S. economy to family finance, then experts say your family, right now, has to cut its bills by 70 percent. Or get a huge pay raise, enough to raise family income by two-thirds. Then, you can survive, for a while, without borrowing.
Of course, our national economy does not operate at all like family finances. Upon that all economists agree. The analogy is purely a political device, typically used for selfaggrandizing political purposes.
The consequences of a default on our nation’s obligations will be catastrophic, according to universal consensus of knowledgeable, responsible and objective observers.
If you are philosophically opposed to tax increases, think about this: a default will, among its many dire consequences, operate to impose upon every citizen a large indirect tax. This will be one ripple effect of the higher interest rates that the government will have to pay to rollover its existing debt. That consequence of default will fall hard upon the middle class, many of whom are extremely vulnerable to interest rate increases.
At the same time, the blow dealt to our economy by default will extend the recession, and cause a further decline in the value of principal asset of most American families, their home.
A perfect storm!
Let’s hope that in times to come, we, as a country, don’t have to look back in profound regret that the “grand bargain” [four trillion in cuts] now being proposed was cavalierly rejected for narrow and short-term political purposes.