POSTED: Tuesday, October 8, 2013 - 9:32pm
UPDATED: Tuesday, October 8, 2013 - 10:06pm
El Paso, TX (KTSM) — President Obama is once again urging Congress to raise the debt ceiling, and says a failure to act would be "catastrophic."
The country's debt ceiling is the amount of money the government needs to borrow in order to pay its bills.
The United States has reached that limit and now needs to borrow more - the question is "How much more?" and if lawmakers can't decide by the deadline in 9 days, the country defaults on their payments and their credit will go down the tubes.
"People are not going to feel as comfortable in lending you money, like they did before," said Henry Gallardo, a founding partner and Director of Investment Management at Strategic Wealth Advisors in El Paso.
If the federal government's credit rating goes down, Gallardo warns the impact on ordinary Americans would be devastating.
He said people could lose their jobs, they'd have less money to spend and pump back into the economy, and interest rates from everything like credit cards to home mortgages would sky-rocket.
"Hopefully, most people have set aside some money, in some sort of an emergency fund, so that they can utilize it during times like this to offset the reduction in their income," said Gallardo.
Negotiations in Washington over the federal budget have become increasingly sour, and so the future of the debt ceiling looks bleak.
"Why don't we do this sooner rather than later?" said Senator John McCain (R) of Arizona.
President Obama says he won't negotiate on the debt ceiling until Republicans end the government shutdown.
"My suggestion to the Speaker has been and will continue to be let's stop the excuses, let's take a vote in the House, let's end this shutdown right now," he said.
But House speaker John Boehner won't budge either, and wants the President to take a second look at Obamacare and re-consider other cuts to the budget before Republicans agree to raise the debt ceiling.
"We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means," said Boehner.
The money the federal government has on hand right now to pay its bills will run out completely on November 1st. Congress needs to come to an agreement and raise the debt ceiling by October 17th.