Cartwright Urges Immediate Action to Avoid Default
WASHINGTON – Building on his efforts to reopen the government, Rep. Matt Cartwright today called for protecting American families from the cost of a dangerous default by taking long-term action on the debt limit. The need for action is highlighted by a new analysis by Ways and Means Committee Democrats that shows the consequences families in Pennsylvania would face under a default. Republican members of Congress have increasingly voiced skepticism that failing to raise the debt ceiling would be harmful for the American economy, despite warnings from economists and financial leaders throughout the world as the U.S. draws closer to the date a default might occur. The new analysis shows the damaging consequences of default on mortgage rates, retirement savings, Social Security, veterans’ disability and pensions, student loans and Medicare.
A debt limit increase simply allows Treasury to pay the bills for spending Congress has already approved and does not add one cent to the debt.
“Defaulting would put an enormous financial strain on American families, from higher interest rates for mortgages and credit cards to lost retirement savings to delayed Social Security payments, particularly here in Pennsylvania,” said Rep. Cartwright. “Economists of all political stripes are warning about the potential consequences of default. With just days left, it is time for my colleagues to start taking that prospect seriously and stop playing political games with the full faith and credit of the United States and the livelihoods of American families.”
The new analysis shows that mortgage rates could rise dramatically during a default, pushing up overall home loan costs. Retirement savings are expected to fall significantly, potentially costing the average person in Pennsylvania a drop of $15,000 in 401(k) assets and almost $23,000 in IRA assets just as they did in July and August 2011, when the U.S. was pushed to the brink of default. 2,660,380 Social Security recipients here in Pennsylvania may not get their monthly checks and 99,489 disabled veterans may not get their pensions as the Treasury Department is unable to borrow. Student loans will cost significantly more. And doctors and hospitals may not get paid for treating patients with Medicare.
The full Pennsylvania analysis is available here.