U.S. Senate leaders have reached a deal to raise the U.S. debt ceiling through February 7, but the deal still has to be approved by Congress and signed by President Obama.
If the debt ceiling is not raised and the U.S. does default, you could feel the effects.
"The most likely scenario is that veterans' benefits could be delayed; Social Security checks could be delayed. Any type of check coming from the federal government might get paid late," says University of South Carolina economist Dr. Bill Hauk.
Jack Jackson receives Social Security and says a delay in his checks would make his life pretty difficult. "Most of us that have paid in it through the years feel that it's something we paid for, and it wasn't voluntary. The government said this is what you will do,” he says. "I never, ever thought that I would hear the day that the United States government would even make any reference to not honoring that agreement."
Susan Appenzeller also receives Social Security, after retiring from working as a teacher and social worker. If her checks are delayed, she’d lose about 40 percent of her income. "And if you've worked all your life as a civil servant, you retire like a servant and you live still from paycheck to paycheck,” she says.
Dr. Hauk says there are other possible effects that almost everyone would feel if the U.S. defaults.
"If interest rates on U.S. government debt go up, well then interest rates start going up across the board throughout the economy. So car loans, home loans, mortgages, credit card bills, all of those interest rates you would probably start to see go up," he says.
College students could lose any federal financial aid grants, and student loan interest rates could go up.
The stock market would also likely drop, meaning anyone with a 401(k), IRA or any kind of retirement savings account would lose money.
Dr. Hauk says it’s also likely the country would go back into a recession, meaning many companies would downsize, laying off workers and making it harder for them to find other jobs.
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