Rep. Lois Capps, D-Santa Barbara, on Tuesday called for the protection of California families, seniors, disabled veterans and students from the cost of a dangerous Republican default, which is now only days away if Republican leadership doesn’t agree to raise the debt ceiling.
According to a new analysis from the House Ways and Means Committee, a default could lead to higher mortgage costs, lost retirement savings, seniors not getting their monthly Social Security checks and student loans costing significantly more. Doctors and hospitals may not get paid for taking care of Americans with Medicare, and disabled veterans may not receive their pensions.
Raising the debt ceiling does not increase the country’s debt or deficits. It only means the country will be able to pay the tab for the money it’s already agreed to spend.
“History has taught us that even the mere threat of default can mean disastrous consequences for the middle class and our economy,” Capps said. “The cost to American families could result in higher interest rates for mortgages, auto loans, student loans and credit cards. More than 3 million veterans would not receive their disability benefits. There would be 10 million Americans who don’t receive their Social Security check on time in the first week alone. Medicare reimbursement for health-care providers would stop or be delayed, leading to doctors and hospitals not getting paid. And leading economists agree that a default on our obligations would cause catastrophic damage to our financial markets and the economic security of all Americans.
"In the midst of a government shutdown that is hurting real people and damaging our economic recovery, the Tea Party faction in the House should not be allowed to continue using the threat of economic chaos to play political games with the full faith and credit of the United States. We must raise the debt ceiling now.”
Should the government default, the U.S. government’s future borrowing costs would rise, and, in turn, so would the nation’s deficit. Every U.S. corporation and municipality would likely see their borrowing costs climb. Unemployment rates would rise, the value of the dollar would decline and lending in the financial markets — the lifeblood of the economy — would dry up.
In California, 273,993 veterans receive disability compensation. If Republicans force a default, these veterans will not receive their benefits come November 1. If there is a default, more than 5 million Californians will not receive their earned Social Security benefits on Oct. 23. And if there is a default, 6.2 million people in California have employer retirement plans that would be at risk.
The potential for default comes as the government shutdown, which has cost the economy more than $4.2 billion, is in its third week. Action must be taken by Thursday.
— Chris Meagher is press secretary for Rep. Lois Capps, D-Santa Barbara.