If you're not the type to follow what's happening in Washington, make the debate over raising the debt ceiling an exception. If Congress doesn't act soon, the consequences will be dire.
With the clock ticking, the unthinkable is now becoming possible.
If congress doesn’t agree on a solution to raise the debt ceiling soon – we’re now talking hours, not weeks – they won’t have time to pass legislation to meet the August 2nd deadline.
Follow the progress
The Wall Street Journal has a live blog that’s updating developments as they unfold: check it out here.
What will happen?
Since this is uncharted territory, there’s no sure way to know the exact effects of a failure to raise the debt ceiling. But there’s at least one certainty: financial markets will swoon. In fact, as the window for compromise closes, it’s already happening. Stock markets around the world fell overnight, and in the first hour of trading this morning, the Dow was down more than 100 points. So even as I write this, your 401k or other investments are already losing money because of something that was completely predictable and entirely preventable.
If no agreement is reached, the U.S. won’t have the money to pay all of its bills. If that occurs, one immediate effect will be a lowering of our country’s AAA credit rating, which could send interest rates higher. Hundreds of thousands of federal workers could be furloughed, government contractors could go unpaid and our economy could sink back into recession.
Will it happen?
Both parties in both chambers of congress, along with the White House, are now working on solutions, some of which will be released today. Odds are that a crisis will be averted – if that weren’t the case, the markets would be even harder hit – but until a final agreement is reached and legislation is presented, passed and signed into law, nothing is certain.
Whether your goal is to buy a house, keep your job or protect your retirement savings, what’s happening in this debate affects you, so keep an eye on developments. And as you do, remember that all this tension and drama never had to happen. It’s nothing more than the simple, inevitable result of a basic problem: dogmatic politicians refusing to put the country’s interests ahead of their own.