For weeks, economists and bankers have been warning that there will be catastrophic consequences if Congress fails raise the nation's borrowing limit.
They say it will mean the nation will default on its debt, which could rock U.S. and global markets. The Treasury has warned that it will exhaust the "extraordinary measures" it has been using to keep paying the nation's bills by Oct. 17.
"To actually permit default, according to many CEOs and economists, would be — and I'm quoting here — 'insane,' 'catastrophic,' 'chaos,' " President Obama has said. "These are some of the more polite words. Warren Buffett likened default to a nuclear bomb."
But to a small group of Republicans in Congress, these warnings are just a lot of hype. They believe the country will not default, even if the debt ceiling is breached, and all the fuss about the debt limit is just fear-mongering.
"To suggest that we can't pay our debts — that's absolutely not true," says Rep. Phil Gingrey of Georgia.
The Republicans in this group have different theories about why the country is not going to default, but the conclusion is the same: Let Oct. 17 come and go without raising the debt ceiling, and America's going to be A-OK.
One common theory: The U.S. will have enough cash on hand to pay Treasury bondholders and everybody else for a long time.
"We can honor our Social Security claims," Gingrey says. "Social Security checks will go out. Medicare claims will be honored."
The problem with that theory is twofold. First, cash-flow: The money going out can be more than what's coming in on any given day. Second: The total going out is a lot more than what's coming in. In the last fiscal year, the U.S. ran a $600 billion deficit.
Economists say if the U.S. can't borrow more money after Oct. 17, a lot of people — including Social Security recipients — won't get paid.
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