Source: http://www.businessinsider.com/what-will-happen-if-we-dont-raise-debt-ceiling-2013-1
The United States has already hit its debt ceiling--the legal limit of the amount of money it is allowed to borrow, as established by Congress.
Right now, the U.S. Treasury is resorting to "extraordinary measures" to keep paying the country's bills.
Sometime between February 15th and March 1st, the Bipartisan Policy Center projects, the Treasury's ability to use these "extraordinary measures" will end.
At that point, we will hit the "X-date."
On that date, if the debt ceiling has not been raised, the United States will begin to default on payments that it is legally obligated to make, payments that Congress has already promised that we will make.
The Treasury may have some ability to choose which payments to default on, and when to default on them, but the bottom line will be the same: The Treasury will only be able to pay about 60% of the bills that are owed.
In relatively short order, therefore, the United States will stiff about 40% of the people and companies it owes money to.
Importantly, this default is different from the "government shutdowns" that have happened from time to time (in the 1990s, for example). In those cases, Congress had yet to authorize government spending. This time, the spending has been authorized: Congress has already promised to pay these bills. This time, in other words, we will be choosing not to pay people and companies we have already promised to pay.
This has never happened before in the history of the United States.
That some representatives in our government say they are justified in making this happen now is reckless and scary. And the support that this vocal ! minority is getting suggests that some ordinary Americans don't understand what will happen if we don't raise the debt ceiling.
So, it is time for everyone to understand.
Below are some slides from a presentation prepared by Steve Bell, Loren Adler, Shai Akabas and Brian Collins of the Bipartisan Policy Center.
This game of chicken that one of our political parties is playing is no joke. To not raise the debt ceiling is to say that it is totally okay to stiff people and companies we owe money to--and, more importantly, to actually stiff them. This is astoundingly reckless and irresponsible behavior (not to mention illegal). And it will have a devastating impact on our country and economy.
The Bipartisan Policy Center looked at what will actually happen if Congress doesn't raise the debt ceiling...
Before we get to that, though, some background. We have already hit the debt ceiling. The Treasury is now using "extraordinary measures" to pay our bills.
Here are some of these "extraordinary measures," along with the cash they're freeing up.
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