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On Thursday, officials announced that the U.S. government ran up its legal borrowing capacity of $31.381 trillion<\/a>, and the Treasury Department began implementing \u201cextraordinary measures\u201d to avoid a default.<\/p>\n So, just how exactly will the nation\u2019s outstanding tab impact its citizens day to day?<\/p>\n KPRC 2 sat down with financial broker Dr. Ralph Steele to discuss what the future may hold.<\/p>\n \u201cI\u2019m talking about loans. Credit card loans, I\u2019m talking about automotive loans. But here\u2019s the big one,\u201d Steele said. \u201cHousing. And mortgage. The interest rate [will go] up.\u201d<\/p>\n Steele says if the \u2018debt ceiling\u2019 isn\u2019t raised, it may cause additional hardship for thousands of families who are already facing difficulty with their finances.<\/p>\n If the U.S. defaults, homeowners may see that increase in mortgage sooner than later. <\/p>\n The U.S. could also lose roughly 3,000,000 jobs, 401(K) accounts could lose about $20,000 in savings, borrowing across the board would become more difficult, and bigger price tags may be seen on everyday items, according to national non-profit organization Third Way<\/a>.<\/p>\n The biggest threat? The fact the country\u2019s national debt may increase by upwards of $850 billion.<\/p>\n \u201cYou\u2019ll have less money for vacations, for your children. Less money for everyday living. For your lifestyle,\u201d he added. \u201cIn other words, it impacts what we call the quality of life. And that\u2019s a hard thing when you\u2019re looking at the debt ceiling.<\/p>\n Republican lawmakers have demanded that lifting the borrowing cap be tied to spending restrictions.<\/p>\n However, The White House says it won\u2019t offer concessions or negotiate on the debt ceiling. Treasury Secretary Janet Yellen said that without any compromise this week, the U.S. could run out of options to pay its bills by June.<\/p>\n HOW COMMON IS THIS?<\/b><\/p>\n \u201cTreasury Secretaries in every Administration over recent decades have used these extraordinary measures when necessary,\u201d Yellen wrote in her letter.<\/p>\n The measures were first deployed in 1985 and have been used at least 16 times since then, according to the Committee for a Responsible Federal Budget, a fiscal watchdog.<\/p>\n WHY DO WE HAVE A DEBT LIMIT?<\/b><\/p>\n Before World War I, Congress needed to approve each bond issuance. The debt limit was created as a workaround to finance the war effort without needing a constant series of votes.<\/p>\n Since then, a tool created to make it easier for the government to function has become a source of dysfunction, stoking partisan warfare and creating economic risk as the debt has increased in size over the past 20 years.<\/p>\n WHAT ARE \u2018EXTRAORDINARY MEASURES\u2019?<\/b><\/p>\n To keep the government open, the Treasury Department on Thursday was making a series of accounting maneuvers that would put a hold on contributions and investment redemptions for government workers\u2019 retirement and health care funds, giving the government enough financial space to handle its day-to-day expenses until roughly June.<\/p>\n By suspending payments, the government can reduce the amount of outstanding debt, enabling the Treasury to keep financing government operations.<\/p>\n What happens if these \u201cextraordinary measures\u201d are exhausted without a debt limit deal is unknown. A prolonged default could be devastating, with crashing markets and panic-driven layoffs if confidence evaporated in a cornerstone of the global economy, the U.S. Treasury note.<\/p>\n DO DEBT LIMIT SHOWDOWNS HELP REDUCE GOVERNMENT DEBT?<\/b><\/p>\n Not so much.<\/p>\n The Congressional Budget Office estimates that annual budget deficits will grow from roughly $1 trillion to more than $2 trillion over the next 10 years.<\/p>\n The imbalance over the coming years increasingly reflects government expenses for programs such as Medicare and Social Security that are outstripping tax revenue. That suggests the government would need severe cuts to spending, major tax hikes or some combination of those options.<\/p>\n In 2011 when Barack Obama was president and Biden was vice president, there was a bipartisan deal to raise the debt limit by $900 billion in return for $917 billion worth of automatic spending cuts over 10 years.<\/p>\n But the debt reduction never fully materialized.<\/p>\n After Donald Trump became president in 2017, Republican lawmakers fueled further debt increases by passing deficit-financed tax cuts<\/a>. Debt accelerated even more with the start of the coronavirus pandemic in 2020, which caused massive government borrowing to pull the U.S. out of a deep recession.<\/p>\n The CBO last year estimated that the U.S. debt would exceed $40 trillion in 2032.<\/p>\n<\/div>\n