How will Kentuckians be impacted if an agreement is not reached on the debt ceiling?
LEXINGTON, Ky. (WKYT) - The deadline for the U.S. to raise the federal debt ceiling is June 1.
According to an EKU professor of government, that deadline doesn’t necessarily mean economic doom.
Dr. Matthew Howell says if we get past that June deadline, the government’s ability to sell assets or prioritize payments runs out. And at that point, the federal government doesn’t have access to the money it needs to pay off old bonds so it can issue new bonds.
So what does that mean?
“When we hit that day again, there are a number of things we can do,” said Dr. Howell. “The government could sell assets it doesn’t want to sell. The government could decide to shut down.”
If a shutdown happens, it could affect the postal office, national parks and the ability to get a passport, just to name a few agencies.
Dr. Howell says if bond ratings change due to the U.S. not paying its bills, it could impact retirement accounts.
“These things often have a lot of federal treasuries in them, and those treasuries become less valuable, so your retirement would take a little bit of a hit,” said Dr. Howell.
Dr. Howell is confident about one thing.
“This is not an issue about paying our debts. We are going to continue to pay our debts,” said Dr. Howell.
According to the Department of Treasury, the country’s debt shrank to zero in 1835 under President Jackson And has increased ever since.
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