If the debt ceiling is not raised by Aug. 2 the U.S. Treasury will not be able to borrow the funds needed to pay its debts.
There will not be a default because the necessary funds to pay debts will be found by stopping Social Security payments and by other drastic steps.
The congressional Republicans are forcing this situation on us by refusing to increase the debt ceiling unless Congress goes along with a large deficit-reduction package. The problem is that the Republicans insist that this package be made up solely of spending cuts and include absolutely no tax increases.
The Democrats have tried to meet the Republicans more than halfway - offering to agree to around $3 trillion in spending cuts if the Republicans agree to around $1 trillion in tax increases.
The Republicans have refused this compromise.
Why are the Republicans so intransigent? Largely because they want to protect their wealthy campaign backers from any tax increases. This is not reasonable because over the years the wealthy have gotten a lot wealthier but the middle class has scarcely improved at all. The wealthy do not need this fanatical tax protection.
The annual incomes of the bottom 90 percent have risen only 10 percent adjusted for inflation since 1973. Over the same period the incomes of the top 1 percent have tripled (FT. com, 7/30/10.)
Since 1980 the top 1 percent or earners have increased their share of total earned income from 10 percent to 22 percent (Office of Management and Budget, www.budget.gov.) The average worker's wages, however, increased only 1.8 percent over the last year, less that the increases in gas and food prices. (WSJ, 6/3/11.)
Over 14 million Americans want jobs and can't find them and over 44 million Americans are on food stamps.(msnbc.com 7/4/11.)
The rich, however, are doing just fine. Average pay for chief executive officers of S&P 500 companies has increased 25 percent since June 2009 to $9 million. (msnbc.com, 7/4/11) Average pay for chief financial officers has increased 19 percent in the last year to $2.9 million. (FT.com, 6/30/11)
In the face of these numbers no one need feel sorry for the rich when the Democrats ask the Republicans to help with deficit reduction by closing some tax loopholes that benefit the rich.
In opposing these actions and risking a financial calamity the Republicans are putting the interests of their rich backers ahead of the interests of the country.