The government shutdown, since October 1st, has already had its effects on the La Crosse community. This has ranged from furloughing government workers to the end of the ROTC program on the UW-L campus. Mike Haupert, Professor of Economics at UW-L, predicts that the shutdown will last until 11:59pm on October 17th. Then another problem will arise in America: reaching the debt ceiling.
So far the government shutdown has continued to deepen America’s deficit and recession. Some government programs were not in the annual spending bill since they are mandatory. An example of this would include paying Social Security. On the other hand, the defense budget requires a spending bill. Many aspects of defense were shut down, but Congress quickly passed an emergency bill to pay active military sections. Those shut down, employees are not receiving a paycheck. This inhibits them and their families from heightened spending. There will be a trickle-down effect throughout the community economy. “It’s not as big of an impact as the economic meltdown 5 years ago, but it will have an impact,” says Haupert.
On October 17th the U.S. is predicted to reach its debt ceiling. This is the maximum amount the government has made legal to borrow. Every year the government decides its spending, how much it can collect through taxes, and how much it can borrow to make up the difference. This difference it needs to make up by borrowing is called the deficit. Almost every year since 1950 the government has run a deficit. These deficits comprise America’s total debt.
America’s total debt continues to rise even with certain sections of government shutdown. The next big question that government will need to answer is, “What bills will we not pay?” This is unless the government decides to raise the amount the U.S. is allowed to borrow.
“Nothing good will happen. So on Oct. 17th, at 11:59pm, at the last minute they can possibly do it, they will settle,” says Haupert. Professor Haupert also predicts that Congress will bend since the President has the upper hand. He also thinks the Affordable Care Act will be put back on the table and tax on medical devices will be removed.
Everything in stocks suggests that the debt ceiling will be raised. As Haupert believes, “Both sides are ramping up the rhetoric, doomsday scenarios; world chaos is going to break out for not extending debt ceiling. Nobody knows exactly what’s going to happen. Neither worst case scenario is likely to happen. Interest will be paid, Social Security will go out, other bills will be put off, but the longer you go on, the more problems you have.”