NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — The US hit its debt ceiling Thursday, triggering the Treasury Department to start taking measures to be sure the government doesn't default on its obligations. Creighton University economist Ernie Goss is convinced that the brinksmanship is bad for the economy generally.
"Default by the federal government, that's just not going to happen," Goss said. "That's unacceptable. It cannot happen and will not happen. However, the Democrats are on the side of raising revenues, of course, the Republicans are on the side of cutting spending. We'll meet somewhere in the middle and that's what's going to happen. In the interim, it's pretty disruptive to have that discussion going on, because there are investors out there that do worry about that. That does tend to push up interest rates, even while they are debating."
The estimate is that actual default would still be several months away.
"The debt ceiling now is at $31 trillion," Goss said. "That's the highest, relative to the overall GDP, it's over 100%. That's getting into scary territory. The interest each month, each year, each day, is going up and up and up."
There's going to have to be some give and take on this, according to Goss.
"I'm normally not on the side of compromise," Goss said. "In this case, I think both sides are going to have to give a bit. I think just the discussion alone is disruptive. I think we all know that ultimately, we will get...something will be passed. We will not violate and not default on our debt. That's not going to happen. However, just the discussion of it is disruptive. We're going to probably see higher taxes now."
It's important to note that the Tax Cuts and Jobs Act provisions will sunset later in the decade, so unless Congress acts, taxes will go up if they do nothing.
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