On Wednesday, Defense Secretary Lloyd Austin warned that if Congress fails to extend the US debt ceiling before the country defaults, national security may be jeopardized, and troops could go without pay. By October 18, lawmakers must vote on raising or suspending the debt ceiling or risk missing a payment to creditors, resulting in a historic national default.
The Department of Defense, the country’s largest federal employer, warned that payments to giant corporations and small businesses might be delayed, jeopardizing American operations. In addition, according to Austin, the benefits due to 2.4 million military retirees and 400,000 survivors would be compromised. And if Congress fails to act, tens of millions of Social Security beneficiaries could see their payments delayed.
Raising or suspending the debt ceiling does not authorize additional spending, but it permits the Treasury Department to continue paying for appropriation bills already passed by Congress.
A first-ever US default would not only postpone payments to soldiers, but it would also likely spark a recession in the United States, according to experts.
Treasury Secretary Janet Yellen said that in the event of a default, she would “fully expect” an economic slump. She has warned that if nothing is done, interest rates will rise, weakening the dollar’s position as the world’s reserve currency.
Despite the gravity of the looming default, Democrats and Republicans appear to be at odds just 12 days before the deadline. Time is ticking.
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