Your Money This Week: U.S. Heads for Default, Republicans Push for Balanced Budget Amendment and Obama Rating Drops

This week has been one of the most turbulent periods of time for our economy for quite some time. The U.S. is currently in danger of defaulting on its debt. If it does, the government would not be able to pay out benefits like Social Security and military pay, and the country would likely lose its AAA credit rating. Here’s what’s happened over the past 7 days:

U.S. Moves Closer to Debt Default

Tomorrow, August 2, is the deadline for coming up with a solution to the current debt crisis. All week, Republicans and Democrats have been arguing over a debt plan, while Americans who rely on government benefits are left to wonder whether they’ll have an income next week.

The fight comes down to two opposing plans, one proposed by Speaker John Boehner, and the other by Senate Majority Leader Harry Reid. The President is encouraging Americans to pressure congressional lawmakers to come to an agreement by writing, calling and even tweeting.

Republicans Refuse Boehner Plan Without Balanced Budget Amendment

A Balanced Budget Amendment, which has been considered for years, now stands as the key issue holding back a debt deal. The amendment to the U.S. constitution would basically require that the country not spend more than it’s income. Almost every state in the nation has a similar amendment written into its own constitution.

In order to pass a constitutional amendment such as the Balanced Budget Amendment, a two-thirds vote of both the House and the Senate is required, as well as a three-quarters ratification from the states. The president is not required to sign.

So what’s the hangup?

While it’s a stretch to expect the approval of an amendment to the Constitution by Monday, Republicans, who refuse to agree to a debt solution that does not include this amendment, also want it to prevent the size of the government from exceeding 18 percent of the GDP. This is a requirement Democrats just aren’t going to agree to, ever.

Obama’s Approval Rating Falls to Lowest Level

Though the ongoing debt debate has been little more than power struggle between Republicans and Democrats, it’s President Obama who has been caught in the crossfire as his approval rating fell to barely above 40 percent. Though Obama’s approval rating has sat at about 45 percent for throughout the year, many blame the president for running up so much debt since he took office in the first place and attribute this to the drop.

Source: The New York Times

What This All Means to You

The country, which has barely begun to recover from the last economic crisis, may soon be thrust into another. While it may seem like the American people are at the mercy of lawmakers, it may be ordinary people like you who are needed to prompt change and demand a solution from your leaders. In the next few days while the debt deadline approaches, take the President’s advice and contact members of Congress to let them know how their pettiness is affecting you.