U.S. debt crisis could potentially throw millions of Americans out of work
(Reuters) – If Washington doesn’t reach a deal soon to keep paying its bills, an economic crisis could start unfolding so quietly on Thursday it will give little hint of its potential to throw millions of Americans out of work.
Many people would not notice right away if the government hits a $16.7 trillion cap on its debt, which could come on Thursday.
Checks would likely go out on time that day for everyone from bondholders to workers who are owed unemployment benefits, according to analysts in government and the private sector.
“The 17th will come, the lights will still be on and everything will look normal for 99 percent of Americans,” said Steve Bell, a budget expert at the Bipartisan Policy Center in Washington.
But that day will also mark America’s passage into a period of heightened risk that its financial sector could freeze up in a panic, dealing a potentially severe blow to the nation’s businesses and households.
That’s because, after then, the government by law will no longer be able to add to the national debt, and will have to rely on incoming revenue and about $30 billion in cash to pay the nation’s many obligations.
Unless Congress raised the nation’s debt ceiling, the money would be gone within days.
Leaders in the U.S. Senate said on Monday they were close to a deal to raise the debt ceiling and reopen the government but were not there yet.
The Congressional Budget Office estimates Washington would start missing payments between October 22 and the end of the month. America could miss a $12 billion payment due to its Social Security pension program on October 23.
Around this time, the economy would start sinking like a stone.
To keep from adding to the national debt, the government would slash spending by about a third from one day to the next. Doctors owed money by the government for treating the poor could go unpaid on October 30. By November 1, soldiers could stop getting paychecks on time, and spending would fall across the country.