Slashing the future
by digby
This post by Kevin Drum outlines some of the consequences of default on August 2nd if the government follows the Tea Party line and exempts Social Security, Medicare, interest payments, military payrolls, and veterans benefits:
You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
The nation’s nuclear arsenal is no longer being watched or maintained
The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity, etc.
The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don’t have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
Our embassies are no longer operating, which will make things difficult for foreign travellers
No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who’s going to be teaching your kids without a special property tax assessment.
The market for guaranteed student loans plunges into chaos. Hope your kid wasn’t going to college this year!
The mortgage market evaporates. Hope you didn’t need to buy or sell a house!
The FDIC and the PBGC suddenly don’t have a government backstop for their funds, which has all sorts of interesting implications for your bank account.The TSA shuts down. Yay! But don’t worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don’t have a vacation planned in August, much less any work travel.
Unemployment money is no longer going to the states, which means that pretty soon, it won’t be going to the unemployed people.
Ok, that’s all very catastrophic and everyone assumes that if this happens everyone will come to their senses when “the markets” tank — but that the real long term danger is that the full faith and credit of the United States will suddenly become a very dodgy prospect with unknown consequences. So, in the unlikely event that they don’t pass some kind of ‘deal to end all deals” or even a short term mini-deal, this would be the type of cuts you’d expect to see — cuts that Michele Bachman and crew obliviously ignore when they agitate for The Debt Rapture.
But that list should make you all quake anyway because it’s a list of “discretionary” expenses that are the main focus of the “deals” that are on the table. Those budgetary items are going to be slashed in the trillions and don’t think real humans are going to feel the effects. Yes, it’s absolutely nuts on a macroeconomic level — but it’s really bad on an individual level too. Those are all things that are hardly “discretionary” in most people’s minds.
But cutting them deeply is exactly what this “deal” is all about. Even without the Safety Net programs being mindlessly included in this thing, brutally slashing these programs is a recipe for second world status in a generation.
Update: My mistake. This list of cuts is from Megan McArdle.
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