A version of this story appears in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.
The warnings about a US debt default are earnest and urgent:
Default would cause a “Social Security shutdown,” according to Senate Majority Leader Chuck Schumer.
There would be “economic calamity,” according to Treasury Secretary Janet Yellen.
For a Republican prediction, look to the “widespread job losses, decimated retirement savings and higher borrowing costs” anticipated by Joshua Bolten, the CEO of Business Roundtable and the former White House chief of staff under President George W. Bush.
Negotiations between the White House and congressional Republicans just got underway Tuesday with the first in-person debt default meeting between President Joe Biden, House Speaker Kevin McCarthy and other leaders.
Moody’s Analytics has predicted a 2008-style crisis, with “spiking interest rates and plunging equity prices,” even if it’s just a brief breach of the debt limit.
CNN’s Tami Luhby and Elisabeth Buchwald have documented these possible outcomes: “5 ways a debt default could affect you.”
But for all the warnings, the specifics of when the US will cross the so-called X-date – when the country could default – and what will happen in the immediate aftermath are maddeningly vague.
“It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills,” Yellen told McCarthy in a letter last week.
She said the X-date could arrive as soon as June 1.
Other estimates, like this one from the Bipartisan Policy Center, suggest the X-date could occur any time between early June and early August.
The specifics of what exactly will happen seem a bit like forecasting a hurricane –…
Read the full article here