What hitting the debt limit way for American households

We Begin our report with the recognition that we are in extraordinary times treasury secretary Janet Yellen has initiated Extraordinary Measures in order to keep the United States from defaulting on its obligations now that the country has officially hit the 31.4 trillion dollar debt ceiling that's the limit Congress puts on how much money.

The government can borrow to make its payments the treasury Department has already started taking steps to delay a default right now that means not investing in some federal retirement funds but placing ious in those accounts that will be paid off later when the situation is resolved down the line around June the treasury secretary.

Estimates it could mean delaying Social Security checks delaying tax refunds furloughing government employees and even closing national parks and museums Senate minority leader Mitch McConnell spoke about the word the work that will need to get done to keep Calamity at Bay I think the important thing to remember is that America must never default.

On its debt it never has and never will but we'll end up in some kind of negotiation with the administration I think what what the Secretary of the Treasury said today she's beginning to use what they call Extraordinary Measures I think this will have to be dealt with sometime in the first half of 2023.

CBS News Scott McFarland has more from Capitol Hill Humphrey Rutherford is enjoying retirement but worried that if the country can't pay its bills his Social Security is at risk at some point still going to affect me it may not affect me right away but it's still going to affect me if there's no deal to raise.

The amount of money the government can borrow by June it risks a market plunge Mass layoffs and a spike in interest rates the current 31.4 trillion dollar debt is more than the economies of China Japan Germany and the UK combined and equals more than two hundred thousand dollars for every U.S taxpayer Pennsylvania Republican Scott Perry said.

The country has overspent he helped delay Kevin McCarthy's election as Speaker a few weeks ago and wants spending cuts before raising the limit the American people are sick of it they want some responsibility used when it comes to spending their hard-earned money and uh and and we're going to get after that that's our pledge but the.

White House says it's too dangerous to negotiate over the debt limit and a standoff with Republicans could lead to an economic collapse a major concern for hardware store manager Bill Hart just last week I purchased for Halloween and Christmas so in this business you have to plan way out especially when you're getting.

Things shipped over from overseas the treasury Department says tonight it'll halt some payments to some federal retiree programs to help buy Congress for months to raise the debt limit after that there will be no more emergency measures to employ John Scott McFarland thank you.

To help us understand this I want to bring in CBS News business analyst Jill Schlesinger here on set with me which is a delight Jill it's good to have you here um all right I'm going to leave the question of when we should be worried about this aside for a second I'll get to that second but.

How bad could this be this debt ceiling breach for regular humans regular Americans um if it comes to pass you know Mitch mcconnelly used the word d to fault and that's a pretty scary word to use when we're talking about the United States government meeting its obligations remember what we consider a r isk-free.

Return is kind of like what could you get if you lent the U.S government money what happens if the government doesn't repay that debt is that all of a sudden we're not seen as this really safe confident economy that actually meets its obligations what does that mean to you and me it means that there's a bit of disarray around the globe if the U.S.

You can't can on the U.S to repay its obligations where are you putting your money and in a real practical term a default or even getting close to a default would likely throw financial markets into disarray stocks we just came off of a horrible year for stocks and bonds in 2022 this could be that kind of loss in a very condensed period.

Of time it could mean the cost of borrowing for everything from your credit card balance and Auto Loan mortgage rates at six maybe they'd go to nine I don't know but it's quite uncertain and uncertainty is the enemy for anyone participating in the economy or in markets so when the when the economy and markets are fearing risk.

Consumers pay the price essentially absolutely and you know when you think about what we have come through even over the last three years it feels like emotionally draining well it's been financially draining as well because a lot of people were really feeling pretty good about their position after covid we had a lot of folks paying down debt they.

Built up their savings with a lot of the emergency measures taken during covid now they're starting to contend with high inflation finally that's coming down and at the moment where we feel like perhaps the economy slowing down that we could see a recession coming this debt ceiling fight starts to get people on edge so now that we've got.

Everybody on Edge Let's talk about a timeline though we're not talking about this happening tomorrow so Mitch McConnell said it needs to be resolved in the first half of the Year what's your sense of when the breaths start to get shallower well I think that Janet Yellen is talking about June um and and maybe they can stretch it out to a July.

Or August time Horizon I think what's really important is when you start to say hey you know what in June maybe you're going to have a delayed social security check that's well and good if you're not relying on social security as your main form of income but about 40 percent of seniors that is their main form of income that does have a direct.

Impact what if we say hey you know what we can't really make these uh tax refund checks go out on time that's a real impact and I think that the June July time Horizon is what we're looking at for regular people who are at home and you say oh my eyes are glazing over when you say the two words debt ceiling just think one thing that's really important.

This is not new spending congresses over time Republicans and Democrats voted to spend certain money some of that money was emergency during covid some of it was unfunded tax cuts under President Trump but they came together they voted for this the bill is due John we bought a TV we got to pay for it right or as Senator Kennedy says the party's over.

You got to pay the ban you betcha Jill Schlessinger thank you so much for being here in person

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