Within the last two weeks TSCL has been troubled by the statements of some members of Congress about what could happen to Social Security and Medicare.
The four Republican lawmakers interested in serving as House Budget Committee chairman in the next Congress all said they would refuse to raise the debt ceiling next year unless Democrats agreed to entitlement cuts (in other words, cuts to Social Security and Medicare) and to work requirements on safety-net programs — measures Dems would find abhorrent. This would set the stage for another high-stakes showdown.
Most political observers think Republicans are likely to win the majority of seats in the House of Representatives and could even win a majority in the Senate.
If that happens, Republicans would be in a position to force the President to make those cuts or face a default in payments owed by the United States on the money it has already borrowed and spent – borrowing that was previously approved by Congress.
The U.S. has never defaulted on its loans and most economists believe a default would have major negative economic consequences for this country and for the world economy.
TSCL will keep a close watch on this as things develop next year.