Debt ceiling debate rages on - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Debt ceiling debate rages on

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Eau Claire (WQOW)- Borrowing is at heart of a debate in Washington.  It seems like it's been one debt crisis after another in the nation's capital.

The current showdown is over the debt ceiling.  The government could run out of cash to pay all of its bills in full as early as February.  The President is calling on lawmakers to raise the borrowing limit beyond the $16.4 trillion, where it's at right now.

"For the last 100 years, the debt ceiling has been raised repeatedly," says Dr. Chris Ferguson, an Assistant Economics Professor at UW-Stout.

Repeatedly is right.  In fact, the debt ceiling has been raised more than 75 times since 1962. 

"Raising the debt ceiling, which Congress has to do periodically, gives the government the ability to pay its existing bills," explains Federal Reserve Chairman Ben Bernanke.  "So not raising the debt ceiling is sort of like a family which is trying to improve its credit rating saying 'Oh, I know how we can save money.  We won't pay our credit card bills; not the most effective way to improve your credit rating."

On Monday, President Obama warned if something isn't done, our economy will suffer. 

"America cannot afford another debate with this Congress about whether or not they should pay the bills they've already racked up," the President says.

House Republicans have said they'll raise the borrowing cap, but want something in exchange: cutbacks.

"I think the real issue here, as we all know, is spending," says Representative John Boehner who serves as Speaker of the House.

"One of the worst times to be worry about debt reduction and deficits is during a recession when spending is automatically going to go up due to the need of unemployment programs and things like that.  And revenue is automatically going to go down as people's incomes are going down," Ferguson points out.

"To even entertain the idea of this happening, of the United States of America not paying its bills is irresponsible.  It's absurd," states President Obama.

Ferguson anticipates negotiations are going to go down to the final hour like they did with the fiscal cliff deal.  So what happens if lawmakers can't agree on a compromise and the country defaults on its payments?

"At that point, there will be a whole series of legal challenges about who exactly among the debtors gets paid; whether it is federal employees, social security pension holders, military.  The question of which debts get paid first is very much up in the air at the moment," says Ferguson.

President Obama says defaulting on our country's bills could cause the markets to go 'haywire' and that interest rates would spike for anybody who borrows money.  The President says that includes home mortgages and college loans.

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