Thom's blog - Wednesday December 1st, 2010

You need to know this. Many incoming Republican freshman members - as well as old guard figures within the party - are promising to deliver on their threat to shut down the government. That is - despite the devastating effects it could have on - not only our economy – but the financial stability of the entire world. If Republicans choose not to increase the debt ceiling early next year – a move supported by the Tea Party and an increasing number of GOP lawmakers – including the second most powerful member of the caucus – Eric Cantor – then the government will indeed shut down. The last time Republicans shut the government down - back in 1995 and 1996 – it cost taxpayers $800 million. So what are the consequences if the Republicans do it again? The Center for American Progress released a report on this issue. First – over 40% of the government will stop working. That means no Social Security payments – no Medicare coverage – no unemployment insurance - no funding for our troops in combat overseas – and no homeland security. Sound like a place you want to be? Second – defaulting on our national debt could cause a run on our Treasury bonds. In other words – all the countries that we owe many to – like China – could immediately ask for their money back. It would be like a run on the banks – but instead – a run on the US economy. On top of that – the credit worthiness of our country would plummet - leading to higher borrowing costs and guess what – a larger deficit and national debt. Finally – the government is responsible for about a fifth of the spending in our economy. If that money is suddenly sucked out – then we might as well brace ourselves for the second Great Depression. There you have it – the Republicans plan to fix our economy.

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