NEW HAVEN, Conn. (WTNH) — With the debt ceiling deadline approaching in just over a week, News 8 spoke with an expert to see how it could affect the people of Connecticut.
David Sacco, a professor at the Pompea College of Business for the University of New Haven told News 8 that if the debt ceiling isn’t raised and the United States defaults on its debt, it could be catastrophic.
If the United States were to miss the deadline and default on its debt, it would cause a whole host of problems, essentially affecting all borrowing rates across the board.
Sacco said because of how bad the consequences would be Sacco says very unlikely to happen. He is confident both sides are being reasonable and will reach a deal in time.
“Were it to happen, and again it’s an incredibly remote possibility – interest rates would go up. United States Treasury rates are the base rate that is used for everything from mortgage rates to credit cards to any type of loans that companies or people make, including auto loans that would cause an interest rates shock, that would cause all interest rates to go up,” Sacco said.
If an agreement isn’t reached before June 5, non-essential government workers would be furloughed and essential government workers would likely stay at work.
“What usually happens is essential government workers people like TSA, the military, the FAA the things we need to have our society functioning is they ask those people to keep working,” he said. According to Sacco, government employees would be paid back in full once the debt ceiling level increases.
On Friday, President Joe Biden said he has had several productive conversations with Speaker of the House Kevin Mccarthy and is confident a deal will be made before the deadline.