The Dangers of Default

Some Republicans have made questionable assertions about the dangers surrounding a failure to pay our bills and prevent a default.

Treasury Secretary Jack Lew, in a speech to the Economic Club of Washington D.C. In his remarks, the Secretary cautioned against relying on unworkable approaches like “prioritization,” which would force impossible choices in paying the government’s bills like whether to pay seniors or veterans the benefits they are owed.

“As administrations of both political parties have previously determined: these ‘prioritization’ proposals are unworkable.  They represent an irresponsible retreat from a core American value: Since 1789, regardless of party, Presidents and Congress have always honored all of our commitments,” Lew told the room of business leaders.

In fact economists have warned that a default would be economically catastrophic. “The devastation to the United States would be so severe that it would take decades to recover from the Depression caused by a default and the attendant dumping of trillions of dollars of U.S. Treasury securities on the global financial markets,” banking analyst Dick Bove, at Rafferty Capital Markets, said in a report for clients.

Among the probable events of a default, Social Security payments would cease; investments would be hit, including pensions and 401(k) plans; Money Markets would be devastated; the banking system would freeze; and global markets, dependent on the U.S. Dollar as the world’s reserve currency, would be devastated triggering an international economic downturn.

Tell House Republicans that this manufactured crisis, driven by the extreme ideological demands of the Tea Party needs to stop. Tell the GOP, enough already!

Check out the contrast between the statements of Republican politicians and financial experts: