Such a default would have significant consequences for the US economy. Here are just some of the things that can happen:
- Increase interest rates across the boar for loans, causing mortgages, car loans and credit card interest rates to increase.
- Small business owners will have a more difficult time getting a loan, as credit will tighten.
- Military men and women will get limited, or no pay.
- Government contracts may be laid off.
- Student loans will be harder to obtain (and have higher interest rates).
- Social Security and Medicare/Medicaid payments may be delayed or stopped.
- Government employees may be furloughed.
An important note here: A debt default has never happened in the United States, so no one really knows for sure what will happen. Unfortunately, it is getting increasingly likely that we will get an answer in one week.