The Global Impact of a US Debt Default
If the US defaults on its debt in June, it could lead to an initial crisis followed by more economic damage with each passing day. Markets could plunge just as Social Security and Medicare become unable to distribute money to those who need the government safety nets. US policymakers would have to make perilous choices about millions of other bills the federal government has to pay each month, especially if they want to buy more time and mitigate the fallout. Treasury bondholders or retirees? Veterans or tax-refund recipients? Defense contractors or federal employees? If bondholders get special treatment instead of Social Security recipients, the US would effectively be paying wealthy investors around the world “instead of paying off your grandma,” said Kroll's Global Chief Economist Megan Greene.