SPRINGFIELD, Mass. (WWLP) – U.S. Treasury Secretary Janet Yellen said they started using “extraordinary measures” Thursday as the U.S. reaches the debt limit. However she’s calling on Congress to act, saying if the debt ceiling is not raised it could have damaging impacts on the economy.
Johh Rogers is an economics professor at AIC. He said when it comes to the debt ceiling, it’s important to understand this is a limit on existing debt, not about taking on new debt.
“It’s like buying something and not paying your bill,” he told 22News.
And much like when you don’t pay your bill, the U.S. government loses credibility when it doesn’t pay down existing debts.
“Ten years ago, the fact that it almost happened caused the credit rating to drop,” Rogers said. “And if it did happen, I think it would be really dire.”
That can have impacts not just on the U.S. but also the global economy, as people from all over rely on the strength of the dollar.
Thankfully, the U.S. government has managed to raise the debt ceiling each time since it was created. According to the Treasury Department, is has been revised 78 times.
As for negotiations, Congressman Richard Neal told 22News in Springfield that he’s willing to talk with Republicans about spending cuts but there is a limit.
“We are not going to cut Social Security, we are not going to cut Medicare to pay for some of the spending priorities they have,” Congressman Neal said.
Congress will need to work out a deal before June 5th to prevent it from defaulting on its debts.