SALT LAKE CITY — The nation's eyes are on Washington as the federal government inches closer to running out of money to pay its bills unless the debt ceiling is raised.
“This is going to impact every aspect of the economy,” explained Andrew Keinsley, Associate Professor of Economics, Weber State University.
Every year, Congress and the president decide how much the government will spend and tax. The difference between the two is what the country borrows.
“For some reason, we put a limit on how much we can actually borrow,” explained Keinsley. “We tell the treasury to go borrow money, but then the treasury has to turn around and come back and say, can we actually borrow that money and then we have to get a separate approval for that process. In a nutshell, that’s the debt ceiling.”
The government is now reaching the limit of how much it can borrow, and defaulting could lead to a shutdown.
“If you can imagine, your employer telling you you’re required to show up to work, but I’m not going to be able to pay you for a while, just trust me I’ll pay you in the end. Trust doesn’t put food on tables,” said Jeff Worthington, President of Utah AFL-CIO.
Some members of that labor union work in the government sector like TSA workers, IRS employees, people at Hill Air Force Base and others; people who won’t have an income if the government shuts down.
“The price of everything has gone through the ceiling and so people are depending on their paychecks, and if they don’t receive their paychecks, it's going to hurt them,” said Worthington.
Worthington hopes the country doesn’t see a repeat of what happened when the government shutdown for over 30 days just a few years ago.
“Back in 2018, 2019, our TSA workers were hit really hard," he recalled. "They were forced to continue to show up to work, even though they weren’t receiving a paycheck."
The shutdown wouldn’t just impact paychecks for federal employees; social security benefits and government programs like Medicare would also be affected, and it may also have a cascading effect on how much consumers can spend.
“If that part of the market gets turned upside down, so does the rest of the financial market,” said Keinsley. “That's going to impact interest rates, that's going to impact people.
"This desire, whether to spend, whether to save their money, what they're going to do about mortgage rates, loans on cars even savings rates. Things like this are going to be dramatically impacted if we default.”
Experts hope lawmakers and the White House don’t wait until it’s too late to do something.
“I’m hoping that our government will come together and work out an agreement,” said Worthington.
