Breaking down the debt ceiling

6:10 AM, Oct 16, 2013   |    comments
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GOLDEN VALLEY, Minn. - If politicians say October 17 is the nation's breaking point, the people they serve reached their breaking point long ago.

"Time is just being wasted," said an exasperated Becky Bergman of Savage.

Although the government is still shutdown, another fight is brewing about raising the debt ceiling. Some believe if it's not raised by October 17, an act only Congress can make, the nation will not have enough money to pay all of its bills.

It has voters back here in Minnesota angry at both Democrats and Republicans.

"It's just unreal. It's like a bunch of ten year old kids," said Butch Borowicz of Litchfield.

"It was the same thing before. We're at the same place. It's almost as if it is a game, said Frank Dolliver of Mahtomedi.

A game of chicken perhaps that involves America' debt ceiling, legislation enacted in the early 1900's that has been raised dozens of times since. Technically the U.S. government hit its $16.7 trillion borrowing limit last spring, but the government has used what it's called "extraordinary measures" to keep paying the bills.

"It's kind of like the maximum limit on your credit card," said economics professor David Vang.

Vang who teaches at the University of St. Thomas says describing the situation as a default on America's debt is inaccurate because under the constitution, the government has to pay its debts.

"So default is not a choice unless someone is willing to be impeached by actually going against the constitution," said Vang.

But tough choices will come next without raising the debt limit, forcing the country to spend only the cash it has on hand. The Treasury Department estimates it has about $30 billion.

He believe one of the first to feel the pinch if a deal isn't done: companies with government contracts.

"So if you're a contract worker for a company that does business with the federal government, your jobs are probably going to be most at risk," he said.

Vang believes if Congress cannot come to an agreement in a few weeks, people getting social security will then start feeling the pain, as will folks who are licensed through the federal government, like gun shop owners.

"If their license is coming due in the next couple weeks they should probably be very nervous," he said.

He suspects that won't happen and a deal will be reached. But he compares not raising the debt limit would be like an addict going cold turkey.

"If you do it all at once, there will be some painful short term adjustments that would have to be made," he said.

Rather he thinks the most prudent way is to narrow the gap over the next two years between how much the U.S. government is spending and making.

Either way, he is optimistic Congress will come to some sort of resolution sooner rather than later.

"If a deal is not reached by some sort by Thursday, I would be extremely surprised is something is not reached within a week of that," he said.

For more information on the debt ceiling, check out these articles:

The back and forth over the Shutdown - NY Times

Nation's balance sheet - USA Today

Follow Minnesota's U.S. Representatives and Senators on Twitter:

@alfranken
@amyklobuchar

@MicheleBachmann
@keithellison
@RepErikPaulsen
@repjohnkline
@BettyMcCollum04
@RepTimWalz
@USRepRickNolan

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