With less than 24 hours to go for Congress to meet the nation’s deadline of October 17th to raise the debt ceiling, there’s some serious concern surrounding what that will mean for the status of the U.S. Economy. News Source 8 sat down with a financial advisor from Barresi Financial to find out what could happen and who will be affected if a deal isn’t made in time.
Raising the debt ceiling has been at the forefront of conversation in Washington over the past few days. Doubts concerning the country’s state of finances raises the obvious question- what could happen if the debt ceiling is not raised?
Financial Advisor of Barresi Financial Scott Violette said, “Ideally nothing really catastrophic will happen the next day type thing essentially what it means is they can’t borrow anymore money to cover some of their bills that are coming up.”
The U.S. Debt tops off at a whopping 16 trillion dollars. Entitlement programs like social security and medicare are big drivers of our debt that continues to accrue interest. The debt ceiling is the total amount of money the government can borrow to pay it’s obligations, and if the government can’t pay the interest it could potentially send the country into a government default. Financial advisors say every investor is different, and a potential government default could have ramifications on their investments.
Financial Advisor of Barresi Financial Scott Violette said, “If you are closer to retirement now, you might want to consider looking at moving more money into fixed income cash and those kinds of things. It really depends on the timeline of your investment. If you’re a long term investor you have to look at this as something that will most likely be a short term blip in your finances but if you only have a few years left you already should be positioned fairly conservative but you may want to get even a little more conservative with this kind of action going on in Washington.”
This isn’t the first time raising the debt ceiling has been debated in Congress, in fact, it’s happened 78 times since 1960. But what makes this time different, is how much debt the country has racked up, and the rapid rate at which it’s increasing.
Financial Advisor of Barresi Financial Scott Violette said, “We now owe as much as what our country is essentially worth, our annual GDP is about 15 or 16 trillion and we now owe that.”
If the government doesn’t have enough money to pay it’s obligations, money will be inevitably cut from elsewhere. Entitlement programs like social security, medicare, and medicaid could be affected. Today is also day 16 of the government shutdown, affecting 17 percent of federally funded employees across the country.