Demystifying the confusion behind the government shutdownFargo, ND (WDAY TV) - It sounded like a line from a fairy tale: at the stroke of midnight, the U-S could have defaulted on its debt for the first time. But unlike the stories we grew up with, the plot twists were real and difficult to follow.
By: Drew Trafton, WDAY
Fargo, ND (WDAY TV) - It sounded like a line from a fairy tale: at the stroke of midnight, the U-S could have defaulted on its debt for the first time.
But unlike the stories we grew up with, the plot twists were real and difficult to follow.
With the clock ticking up on the shutdown, but down on the debt default, confusion seemed to be abundant.
In effort to make clear sense of the mess, the U.S. Department of the Treasury released a report entitled, "The Potential Macroeconomic Effect of Debt Ceiling Brinkmanship.” Way to keep it simple, Washington. A better title might have been, "Why You Should Care about Default."
The report says that in default, the government would spend $60 billion a day while taking in $30 billion.
Immediately impacted: Social Security, Medicaid, Medicare, the IRS and veteran's benefits.
And even if you don't feel that pinch, like me, chances are you won't have to look far for someone who is.
Russel Foster works at WDAY... and served for 23 years in the U.S. Navy.
Foster: "Effective November 1st, I would effectively get no disability benefits."
As we continue to widen the impact of default, you might see an increase in interest for mortgage rates, credit cards, college loans and business borrowing.
Those spikes all coming from the biggest direct impact of them all.
The Treasury estimates that one half of all Americans own stocks either directly, or indirectly through 401k plans or mutual funds.
During the 2011 debt ceiling impasse, the resulting dive in the market meant a $2.4 trillion dollar reduction in household wealth in the United States-- $800 million from retirement benefits.
And if you need to see a face impacted by that gut punch-- look in the mirror.
Fortunately, the economic disaster seems to have been stymied.
But, as news spread, it hardly inspired a message of congratulations for members of Congress.
Amanda Cooper "Don't let it happen again. If you truly care about us, don't let it happen again."
And perhaps it's true that, as cliché as sounds, only time will tell if this story has a happy ending.
The deal struck by Congress allows the Treasury to continue borrowing through February 7.
The government would re-open through January 15.