Consequences

Who: Peter Gorenstein
What: "5 Consequences If America Doesn't Raise the Debt Ceiling", Yahoo Finance
When: July 22, 2011

... David Walker -- the former Comptroller General of the United States and head of the Government Accountability Office -- says it's imperative both sides of the aisle find a compromise that also sets conditions to lower our long-term debt and get us back on track. If they don't, the rest of us will pay.

Here's what he says will happen if the federal government can't reach a deal:

1. $4 billion-plus a day will come out of the economy.
2. Government and civilian military workers will be laid off temporarily. That will result in penalties for late payment, to be paid by taxpayers.
3. Social security payments will be delayed.
4. No one knows how bad the reaction will be, but Walker is confident it will be negative for the stock and bond markets and the economy.
5. Interest rates will rise. For every 1% rise in interest rates, taxpayers will be on the hook for an additional $150 billion in debt payments.

There seem to be some in the GOP who actually want these sorts of things to happen. Nate Silver discounts that theory, and reasonably so, though it seems worth mentioning that an associate the other day referred to the prospect of not raising the debt ceiling a chance for the GOP to accomplish something "right and meaningful".