What seemed inconceivable only a few weeks ago is rapidly becoming a contingency everyone in the United States is bracing for: come Thursday, the Treasury will exceed its borrowing limit, and it is unclear if Congress will be able to act in time to raise it.
Pollsters have been working furiously over the past few weeks to keep their fingers on the pulse of public sentiment. Americans are playing the blame game with just as much vigor as politicians are engaging in brinkmanship, and the ebb and flow of public opinion has dominated the convection currents of the news cycle.
At last check, according to a survey conducted by Pew Research on October 9-13, more people (46 percent) fault the GOP for the current snafu than the Obama administration (37 percent), with nearly one in five people (17 percent) volunteering that both parties are at fault.
But playing the blame game right now is ultimately unproductive. Americans will get their chance to convert their opinions into action during the 2014 elections. For now, it seems at least slightly more constructive to think about the situation at hand: the ongoing partial shutdown of the U.S. government and the impending debt ceiling deadline.
Up until recently, the question that most people were actually debating was not if Congress would increase the debt ceiling come October 17, but when and how. Although most answers to the “when” question seemed to fall around the eleventh hour, and answers to the “how” question were too partisan to be of any real use, there has generally been a consensus that Congress would act.
Or as former Treasury Secretary Lawrence Summers recently put it: “We will not default. I cannot say exactly how the political machinations will work out, but I am as certain as anything that any dollar of interest will be paid, and paid on time.”
But with time running out, the tone of the conversation is changing.
What exactly would happen if the U.S. fails to increase its borrowing authority by Thursday is not exactly clear. The Treasury said that it will have about $30 billion in cash come October 17, and it will then have to depend on incoming tax revenues in order to pay the bills. These revenues should be able to finance about two-thirds of government operations.
The best-case scenario in the event that the federal borrowing limit is not increased is that government spending declines by approximately one-third overnight and a corresponding shockwave is sent through the economy. The worst-case scenario is that the Treasury is unable to prioritize payments and ends up defaulting. Either way, Americans are concerned.
According to the Pew Research poll, 51 percent of Americans believe it is absolutely essential to increase the debt ceiling, else we risk another economic crisis. This is up from 47 percent in the October 3-6 period.
However, 36 percent of Americans believe the country can bump into the debt ceiling without any major economic problems. In addition to the breakdown above, 43 percent of conservative Republicans believe the U.S. does not need to raise the debt limit at all.