Congress deadline to raise debt ceiling nears with no deal in sight – The Pioneer


The economy faces potential damage if debt cap agreements are not reached on time

The end of the government’s fiscal year is September 30, a date that will come in the blink of an eye. If Congress fails to come to an agreement to raise the country’s spending limit, also known as the debt ceiling, the United States will default on its debt, causing government shutdown and other economic problems. .

Since the federal government is the largest employer in the United States, a shutdown could “result in a significant reduction in consumer spending if employees who are temporarily laid off believe the loss of income is permanent,” according to Christian Roessler, professor. aggregated to the department. of Economics at California State University, East Bay. It’s no secret that job insecurity forces consumers to be more careful about how they spend their money, and for a struggling economy, consumer spending is vital.

A government shutdown would also affect government services, causing delays in processing permits and licenses. Whatever the outcome of the debt ceiling negotiations, Social Security benefits would not be affected, according to to the President of Social Security Works, Nancy Altman. However, a delay in the speed with which these checks are sent could still occur.

The fall of the United States in default would also affect the “perceived creditworthiness of the US government – the likelihood of us servicing our enormous debt to domestic and foreign citizens and entities – affects global financial markets,” Roessler added.

Roessler explained that while a closure would show the government’s commitment to keeping debt manageable, it would also highlight how unsustainable public spending is and paint a picture of our inability to raise sufficient funds to pay it down.

Such an image would concern the financial markets, and according to Roessler, they could interpret it as a “sign of instability which could translate into higher risk premiums on the public debt, and a less willingness to carry out transactions in dollars. , which would devalue the dollar. against other currencies.

Recently, the House of Representatives passed a law to raise the debt ceiling so that the government can cover its expenses, but there are concerns that the law will not be passed by the Senate due to Republican opposition.

Opposition that comes from Republicans unwilling to increase the federal borrowing limit that would allow President Biden’s $ 3.5 million human infrastructure plan to go through the budget reconciliation process, a process that would not require the adoption of Republican votes, due to a Democratic majority.

As Congress continues to play political chess, the jobs and paychecks of thousands of people are on the line as the clock ticks and the deadline draws near.

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