Default would impact all Americans

A default would damage America's reputation as a safe haven for investors. It would tarnish the dollar, make us a 'debtor nation,' and force hardship on ordinary Americans.

The only way to avoid this is for Congress to raise the debt ceiling, and this is not uncommon, it's been raised 25 times under presidents Reagan and Bush.

“If the United States stopped paying its treasury bills this could have tremendous consequences,” said UCSD Political Science Professor Thad Kousser.  “The stock market would plummet, our bond ratings would go down from the triple-A rating where they are (now), possibly the dollar could lose its status as the currency that marks the world's markets.”

And with revenues falling short of what the country needs to pay its bills, and no ability borrow, you would soon have to stop sending out social security checks and veterans benefits.

A default would touch everyone.

“Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people,” President Obama said.

We are a week away from the deadline to raise the debt ceiling, but the political pressure hasn't reached the point where one side will give in.

The Republicans want to stick it to the president by raising the debt ceiling short term, and revisiting it next spring.

“President Obama doesn't want to see the can kicked down the road to the spring when he's running for re-election because that's when Republicans will have real leverage to force him to make a deal to cut spending more deeply than he wants,” said Kousser.

Speaker Boehner is rounding up the votes for his plan.

“If the president signs it the crisis atmosphere that he has created simply disappears,” John Boehner said.

But Boehner's problem is the Tea Party members in his own party. They say his plan doesn't cut spending enough.

Senate Majority Leader Harry Reid has a plan similar to Speaker Boehner's, but Reid's plan protects the president by putting off the debt ceiling issue until after the 2012 elections.

Both sides have stated time and time again that the debt ceiling will be raised. The question is for how long?

Professor Kousser says there's a good chance of a deal this weekend or early next week because that's when the political pressure will be at its highest point.

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