Failure to raise debt ceiling could impact everyone - WKOW 27: Madison, WI Breaking News, Weather and Sports

Failure to raise debt ceiling could impact everyone


MADISON (WKOW) -- If Congress can't come up with a deal to raise the nation's debt ceiling, senior citizens on fixed incomes will likely feel the greatest impact.

"We live off of investments and we live off of pensions and that's basically it," said 75-year-old Phillip Herring of Madison.  "I don't work and so, it has to be raised."

University of Wisconsin Economist Justin Sydnor agrees.

"Probably the first thing that would happen would be that there would be some sort of stopping of payments that the government normally has to do, so the big things might be, social security checks might be delayed," said Sydnor, who also believes reaching the debt ceiling would shake investor confidence.

"People would be uncertain about what was going to happen," explained Sydnor.  "Whether the government was going to start defaulting on interest payments and those sorts of things and that likely would cause a big disruption in the stock market."

Countries like China that hold our debt would also be likely to raise the interest rates on it.

"And as those interest rates rise, that may ripple through to all sorts of interest rates; the interest rate you pay on your mortgage, on your car debt, and other things like that," said Sydnor.

"There's always a thousand scenarios of the worst doom possible," scoffed Robin Soileau of Madison.

Soileau is also close to retirement, and has some worries about her investments, but feels strongly that raising the debt ceiling will only cause more damage in the long run.

"We can't let the debt snowball anymore, so I think yeah, we Americans are going to be up for a big change," said Soileau.

But Sydnor says the only thing truly up for debate is when the bottom will fall out.

"At some fundamental level there does come a stopping point where if we're spending more than we take in in tax revenue and we don't allow ourselves to borrow money to do that, there comes a stopping point where certain checks have to stop being paid. "

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