Introduction
So. The United States faces the possibility of defaulting on its debts. That’s something that might happen in, oh let’s say, Haiti. And it’s kind of a big deal. Your Congress and the White House struggle in vain to negotiate a deal that would prevent a default. Democrats and Republicans have repeatedly failed to agree on spending cuts. Not gonna happen.
Meanwhile, Tea Party-sponsored lawmakers agree only that taxes are worse than immigrants, closing tax loopholes leads to heroin addiction, and Reagan would never do that, although he did exactly that um, about a dozen times.
Oh, and it seems that nearly every bonehead on Capitol Hill is making his or her own debt proposal which don’t stand a chance in hell of doing anything except making underpaid staffers pull all-nighters and have to work on weekends. Thank you for your service, kids.
Just the FAQs, Ma’am
During these difficult and challenging times, persistent questions about what will happen next continue to swirl around like the late Amy Winehouse’s beehive on a blustery day. To help you navigate your way through the swirl, we have provided more FAQs than you want or need regarding the debt ceiling, defaulting, and of course, Zombies.
Hey, What is Debt, Anyway?
Good question. Let’s start at the beginning and see what the Bible has to say about debt. To paraphrase:
God wants us to lend to others. However, it’s kinda tough if you don’t have anything to lend. (Deuteronomy 15:6, 28:12, Matthew 5:42)
We must pay back what we borrowed. Or said another way, if we borrowed it, we should pay it back. (Psalm 37:21, Ecclesiastes 5:4).
Hmm, that last one is kind of interesting.
What is a Debt Ceiling?
The debt ceiling is the legal limit that your US Federal Government can borrow money. Kind of a budgety thing. Math.
Can the Debt Ceiling be Changed?
You bet! Since the late 1950s, your US Federal Government increased its borrowing from the public in all years, except in FY1969 following imposition of a war surcharge and in the period FY1997-FY2001. You should try it!
No Way!
Way! Members of Congress don’t like to talk about it openly, but every time they vote for a spending hike or tax cut, they tacitly agree to raise the debt ceiling.
How Much $ is the Debt Ceiling?
The debt ceiling is $14.3 trillion, give or take. If the debt crisis continues, your US Government reaches a point in which it cannot borrow the money it needs to run stuff. And that would be a bad thing.
Is That a Lot of Money?
Yes.
What’s the Big Deal?
The nation’s debt is slouching toward the legal limit of $14.3 trillion. Treasury Secretary/boy-wonder Timmy Geithner says the ceiling could be breached any minute now. You can almost feel it.
Say, You Got a Chart About All That?
Sure. Check this out. It lists the gross US federal debt as a percentage of the GDP by Presidential term. You know, for a while, your US Government ran a profit. Actually made money. I’m just saying.
President | Term Years | Increase Debt/GDP |
Nixon | 69-73 | -3.0% |
Nixon/Ford | 73-77 | +2.0% |
Carter | 77-81 | -3.3% |
Reagan | 81-85 | +11.3% |
Reagan | 85-89 | +9.3% |
Bush 1 | 89-93 | +13.0% |
Clinton | 93-97 | -0.7% |
Clinton | 97-01 | -9.0% |
Bush 2 | 01-05 | +7.1% |
Bush 2 | 05-09 | +20.7 |
Obama | 09- | +9.0% |
Hey, I thought Reagan…Wow. Really?
Yep. Funny thing—people believe what they want to believe, despite the facts.
So What Now?
Lawmakers must raise the ceiling by $2.2 trillion, simply to help the government make it through next year.
Is That Really a Lot?
That is more than the amount Newt Gingrich owes Tiffany and Co. for jewelry purchased for his current and third wife, the one they fear and call Callista.
Why Does the US Have So Much Debt?
Funny story. Under President George W. Bush, the national debt soared to $4.36 trillion to pay for the wars conflicts in Iraq and Afghanistan, massive government expansion, and new tax cuts. Under Obama, $3.9 trillion was added for the stimulus to avoid economic meltdown and due to decreased tax revenue during a recession. Also, Michelle Obama bought a new White House tea set.
Wasn’t There a Commission About This?
Yes sir. That would be the bipartisan National Commission on Fiscal Responsibility and Reform. Bye-Partisan.
Well, What Did They Propose?
They proposed a six-part plan to put our nation on a path to fiscal health, promote economic growth, and protect the most vulnerable among us. Like zombies.
Did Our Lawmakers Adopt the Plan?
Oh heavens no. They are indebted to lobbyists who would slap their hands if they tried to change anything. But Representative John Boehner proposes another commission to seriously study the situation again. Mo better, I suppose.
What Has the Government Been Doing?
Your US Government has managed to avoid default for the past few weeks by using what the Treasury describes as "extraordinary measures to create additional headroom under the debt limit." Kind of like what bordellos do when they have obese clients.
What Happens If We Default?
First, if the deadline is not met, the country would likely enter a super serious recession which would cause super bad chaos in the global economy. Bad things would happen. Gloom would prevail. Goth bands would be taken seriously.
Second, Experian, Equifax, and TransUnion would reduce the country’s credit ratings from the 900s down to the 300s. The country couldn’t get a credit card, buy a used car, or pay for hookers. Things would be grim. End times.
Third, it would cost more for the government to borrow money. Higher interest rates for mortgages, loans, and credit card balances. People will sell their gold fillings, relatives, and body organs. Many Americans would move to Canada.
Fourth, the country’s economic reputation would take a major hit in the markets, creditors would demand higher interest rates, and investors would drop their holdings in US dollars. The country would be renamed North Mexico.
Say What?
In the event of a default, the rating agency Standard & Poor's would cut America's credit rating by one notch, from the top level, AAA, to the next level, AA+. At that point, millions of investors, Government officials, and retirees would take a series of steps that eventually lead to joining AA themselves.
How Does All This Affect Me?
If your US Government defaults, it may not be able to pay Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, or Groupons.
How Will this Affect my 401(K)?
Hopefully, your retirement funds are diversified in relation to capitalization ranges, fundamental characteristics, and region. Nevertheless, your portfolio will be affected in ways that you can’t wrap your mind around just yet. You are doomed. Sell now. Buy gold. Avoid bonds.
What Happens to Govt. Employees?
For the most part, Federal Government employees will have a lot of time to gently reflect on the myriad mistakes in their lives that led them to become Federal Government Employees in the first place. The question “Why” will come up a lot, followed by “What just happened?”
What About Zombies?
In the event of a default, a Zombie Apocalypse is likely. The Centers for Disease Control and Prevention (CDC) has set up Zombie Preparedness Centers throughout the country. The CDC will provide critical information regarding Zombie-related prevention, treatment, and evaluation routes, primarily through Facebook and Twitter.
PDF version with nice photos:
