With the focus of both political parties on our nation’s debt, something we get used to hearing are certain talking points. One of them is that the United States hasn’t ever defaulted on our debt. True, kind of.
In 1979, Congress took its sweet, sweet time in authorizing an increase in the debt ceiling. The delay in Congress caused a logjam in processing payments at the Treasury Department, which officials technically argued wasn’t a default. It may not have been a default in the classical sense, the bondholders being paid eventually, but it was a delay, and for that, bond markets essentially punished the United States with interest rates that were about a half per cent higher, an interest rate hike which translated in billions of dollars more in interest payments that otherwise wouldn’t have been made.
In a far more globalized economy with far more United States debt, the results would be apocalyptic, economically speaking. Let the Republicans run down the clock on the debt limit. It’ll make them look like the economic terrorists that they are, holding an entire nation hostage to advance their extreme ideological agenda. After we raise the debt ceiling (an inevitability), we can get back to the real topic at hand, jobs, that actually has in impact on the daily lives of ordinary Americans. Until then, brace yourselves.