Is the United States Going to Default on it’s debt?
POSTED May 24, 2023
The definition of “default” according to the Oxford dictionary is: failure to fulfill an obligation, especially to repay a loan or appear in a court of law. This type of default can happen to individuals, businesses corporations and even countries. Sadly, default is a real danger for the future of the US.
The total public debt of The United States is $31.46 trillion dollars, and for several years now, that debt has been higher than the GDP (gross domestic product). The US is in debt to itself, “21.8% of the public debt, or $6.87 trillion, is owned by another arm of the federal government itself. That includes Medicare, specialized trust funds, such as those for highways and bank deposit insurance.” according to the Pew research center. This hasn’t been a problem for many years; if the US reaches its debt limit, politicians usually end up raising the debt ceiling to avoid going into default. The debt ceiling was last raised in 2021 to $31.4 trillion. However, there had recently been an extreme divide in congress, and an intense debate goes on weighing the pros and cons of raising the debt ceiling.
If the United States were to go into default, the economy would be severely damaged according to the Pew research center. The US would be unable to pay the 66 million retirees, disabled workers, and others their Social Security benefits, which totals about 25 billion dollars a week. Thousands of Americans will lose their access to healthcare because the US is unable to pay Medicare Advantage insurers program and Medicare Part D prescription drug plans; thats about 40 billion dollars a month. Another 25 billion dollars won’t be able to paid to active-duty military members, civil service, and military retirees (veterans). Some experts think that inflation would go through the roof while the US government looks for a way to pay off the debt. All of these factors will result in an increase in poverty and homelessness.
In response, the GOP bill was proposed to help limit the US government’s spending. According to CNN the bill would limit spending but at the cost of others. It would cancel all unobligated COVID relief money; these changes would only reduce government spending by 30 billon dollars over the next 10 years. It would also get rid of the 71 billion dollars given to the IRS to help with hiring and upgrading their technology. That’s not all, student debt relief given by the Biden Administration will be blocked. After all of that, some might not even be able to get food because, according to PBS news, the bill will “expand work requirements for recipients of federal cash and food assistance”, making it even harder for people to survive.
Overall, the US is still in danger of going into default even with introduction the GOP bill. The deadline is June 1st 2023 before the US officially defaults.