The Republican Congressmen and Senators are playing an extremely dangerous game with their nation's finances. In their desire to defeat Barack Obama in 2012, they are pushing the issue of National Debt Ceiling to the brink.
If Congress does not approve an increase in country's debt ceiling by August 2,2011, United States Government will default on its debt obligations at the rate of $4 billion a day. The will result in lowering of US credit rating from AAA and no one will be willing to lend money to US Government unless there is a substantial increase in interest rates.
The interest rate hike will hit the already weak economy hard, pushing unemployment to double digits, the housing market will suffer a down turn like it has never been seen before. Already some 29 million homes are under water i.e. their mortgages are higher than market values, increase in mortgage defaults will bankrupt many US banks and unlike 2008, Uncle Sam will not be able to save them this time as Uncle Sam will itself be bankrupt.
Are the Republicans really this desperate to defeat Obama that they will sink the entire US ship? Many think they are playing brinkmanship and will come good at the last minute to avoid default. I hope they are right, because otherwise they have to be extremely despondent to do this to their own country.
The US default will also impact the World economy. The already suffering European economies of Greece, Ireland, Portugal and others will sink even further, resulting in a possible breakup of EU or the Euro as a single EU currency.
And why are Republicans not willing to increase the debt ceiling even once in Obama's three years, when they raised it no less than seven times in Bush's eight years? Apparently they want more tax cuts for the wealthy and oppose closing tax loopholes for big Corporations. They want to eliminate Medicare and cut Social Security for the poor. The American public knows well that the high debt is a Republican legacy from George Bush's ill planned wars and tax cuts cuts for the rich.
If a default occurs, Obama will probably take the high road and heap entire blame on Republicans and rather than winning the White House in 2012, Republicans could end up losing majority in the House and many Senate seats too.
In case of default, US voters have only themselves to blame for giving Republicans and Tea Party candidates a majority in the The House in 2010 despite George Bush's disastrous eight year Presidency.