There’s a lot of scary talk about what would happen if the federal government defaults March 27.
But let me read to you what the Department of the Treasury says would happen – because that’s where the buck really stops. When the Department of the Treasury talks about consequences, this is the department that writes the checks telling you exactly what it will do if Congress won’t let it borrow more money.
I quote from the fact sheet: “…the government would have to stop, limit, or delay payments on […] Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds.”
If it can’t borrow, the Treasury is telling us that will only write checks as actual tax receipts come in – and by one estimate, that would mean cutting spending by $74 billion a month. So let’s do a little arithmetic: Cutting $74 billion a month would mean cutting about $2.5 billion a day.
The average annual salary in the United States is $50,000 a year. So a default lasting just three days would take the equivalent of 150,000 full-time jobs out of the economy.
That’s the number of jobs we just added last month!
‘But Dave!’ you say, cutting federal jobs should SAVE money. You would think so, except that the official report on the 2011 debt crisis, when federal employees were furloughed – found that it ended up actually raising the debt by $1.3 billion.
The More You Know.