Central Texas economist says debt default the bigger threat as federal shutdown looms
KILLEEN, Texas (KWTX) - A government shutdown remains a possibility as U.S. lawmakers continue to feud over raising the federal government’s debt ceiling and the impact could be felt soon by federal workers or anyone who relies on government services.
According to some reports, a bill to avoid the shutdown cold come as early as Wednesday night to keep the government funded through December.
The biggest concern is getting something done before Thursday, the end of the fiscal year. Getting nothing done means a government shutdown, but an economics professor at Texas A&M - Central Texas said the bigger issue is the national debt.
“So, the real issue here is not really the government closing down,” said Robert Tennant, interim chair of the Accounting, Finance and Economics, “But the government not passing a new debt ceiling by the 18th day of October.”
Currently, the U.S. is operating at a debt level of $28.43 trillion. The debt limit is $28.4 trillion, he said.
The government does have the means to keep making payments to honor the debt up until around Oct. 18, he said.
There still could be a government shutdown during that time, which would mean federal employees may not get paid and social security benefits could be delayed, among other issues.
“And yes, they may pay you in a few weeks or a month,” Tennant said. “But that doesn’t help on Friday or next Friday.”
If no agreements are made and the U.S. defaults on debts, the impacts could expand from that. Possibly for anyone in need of a mortgage loan.
“Because you would only want to lend to people who are better qualified,” Tennant said. “Because you would be willing to assume less risk.”
As far as the government defaulting is concerned, Tennant said that could be far off.
“For most people’s point of view, the idea of defaulting is very remote,” Tennant said.
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