What happens if the U.S. defaults on its debt?

Make Me Smart

Marketplace

Business, News

4.6 • 5.5K Ratings

🗓️ 25 January 2023

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

As Kai Ryssdal puts it, the United States is like House Lannister from “Game of Thrones”: It always pays its debt. But if Congress isn’t able to increase the debt limit, the government won’t have enough money to pay all its bills later this year. A listener called in to ask how that would affect regular Americans. We’ll get into it and answer more of your questions about the economic consequences of exclusionary zoning, how tariffs work and how households of different income levels are affected by rising inflation. Plus, is Kai an electric vehicle convert?

Here’s everything we talked about today:

- “Secretary of the Treasury Janet L. Yellen Sends Letter to Congressional Leadership on the Debt Limit” from the U.S. Department of the Treasury

- “Debt Limit Brinkmanship (Again)” from Moody’s Analytics

- “America’s racist housing rules really can be fixed” from Vox

- “Understanding Exclusionary Zoning and Its Impact on Concentrated Poverty” from The Century Foundation

- “What Is A Tariff And Who Pays It?” from The Tax Policy Center

- “Congress Should Take Back Its Authority Over Tariffs” from Foreign Policy

- “The Truth About Tariffs” from the Council on Foreign Relations

- “For Black and Latino families, inflation can hit even harder” from Marketplace

- “Inflation Disparities by Race and Income Narrow” from Liberty Street Economics

- “EV Consumer Survey Report” from Plug In America

If you’ve got a question about business, tech and the economy, give us a shout. We’re at 508-U-B-SMART or email us at makemesmart@marketplace.org.

Transcript

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0:00.0	Let's go
0:02.0	Oh
0:04.0	That was fast I say it and Jacob
0:07.7	Hey everybody, I'm Amy Scott
0:10.2	We are ready. We promise. Welcome back to make me smart where we make today make sense and even if we're not we'll get through it anyway
0:17.1	I'm carristall this is what do you want to know when's day you bring the questions?
0:20.3	We will bring the answers the best way to get those questions on this podcast is to live as a voicemail at
0:26.4	508 UB smart or send us an email. We can just read it. You know make me smart at marketplace.org
0:34.0	All right, let's hear the first question of the day. All right
0:36.8	Hi, my name is Daniel and I'm calling from Los Angeles, California
0:42.0	What happens when the USA defaults on it's that will it cause a big recession for
0:47.7	regular Americans or will there not really be any changes?
0:52.4	Thank you so much and look forward to hearing back. Okay, very bad things will happen
0:57.6	It will cause a big recession and there will be a lot of big changes. Thanks for coming to the podcast. No, look so
1:04.3	Here's here's the deal. Here's the deal
1:07.3	We are now in a give or take five and a half month political
1:14.4	Goat rope over the debt limit the debt limit of course is a statutory limit on how much the United States can borrow to pay the money that
1:21.2	Congress has already spent
1:24.0	It is now 31.4 trillion dollars is the debt limit word about 31.5 now so
1:31.2	Janet Yellen's Secretary of the Charterry said last week look Thursday
1:35.1	We hit the limit and I got to move a bunch of money around so we've got until June-ish
1:39.3	Until something really bad happens
	...

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