DETROIT (WWJ) – The Republican-led House has rejected a Senate Democratic bill that would slash spending and avert a federal government default. The vote was 246-173.
It was a pre-emptive vote in the high-stakes political fight as the Senate still hasn’t voted on the measure from Senate Majority Leader Harry Reid to address the impending debt crisis.
The measure would raise the debt limit by $2.4 trillion while cutting spending by $2.2 trillion.
Fox 2 Business Editor Murray Feldman spoke live on WWJ about what COULD happen if the situation is not resolved before the deadline.
“I’ve seen a report that shows there are almost 200 towns, cities and states that would be immediately downgraded. They would get downgrades because they’re counting on Federal funds coming to them, but if they get downgraded what about everybody that does business with them?
“Then they would be at a higher credit risk because somebody would not be able to pay their bills, potentially, and they would be downgraded too. So this thing could spiral down, down, down.”
“There is enough money coming in to pay the bond holders, interest payments that are coming due, there is still enough money left over to pay medicare, medicad and social security, so defaulting, which is stiffing somebody something that you owe them, is apparently not going to happen, according to so many of the financial people we’ve talked to,” says Feldman.
Feldman added that most financial experts do not believe the nation will default and a solution will be reached in the 11th hour.