Central Texas economists say U.S. will likely raise debt ceiling before deadline

The national debt clock is seen in midtown Manhattan, Thursday, May 25, 2023. Both President Joe Biden and House Speaker Kevin McCarthy are speaking hopefully of the likelihood of an agreement to raise the government’s debt limit and avert an economically chaotic federal default. (AP Photo/Mary Altaffer)

by: Earl Stoudemire

Posted: May 31, 2023 / 06:57 PM MDT

Updated: May 31, 2023 / 06:57 PM MDT

Waco, TX (FOX 44) — The house is still working on its decision to approve moving the debt ceiling to 2025.

The previous cap set by congress of $31.6 trillion was already reached by April.

Pushes are coming from both republicans and democrats on how government funds will be spent as the U.S. gets closer to a default payment.

Local economists say democrats accomplished their goal to not have work requirements for people to stay on Medicaid.

However to reach an agreement republicans got leverage on food stamp eligibility.

“Able bodied people who receive food stamps and other government support would have to be actively looking for employment or getting education or doing things to improve their likelihood of being employable while unemployed,” said Dr. Rob Tennant, A&M Central Texas.

Tennant says the decisions made between democrats and republicans are for the same result – not picking up more debt.

“Those that say we have to because we’ve made previous commitments which is obviously the case then it comes to how do we spend the money,” said Tennant.

Economist Ray Perryman from The Perryman Group says this is the closest the U.S. has been to reaching default since 2011.

Perryman and Dr. Tennant both believe the government will lift the debt ceiling before its Monday deadline.

If passed, Perryman says Central Texas could be impacted by spending limits.

The defense industry, which is big in Central Texas, there’s some limitations on how much will be spent in those arenas, that type of thing, which could have some trickle down effects on to some of the local areas,” said Perryman. “The bottom line is the deal doesn’t change a whole lot of what we have right now.”

Perryman says budgeting can be done later if both political parties agree to lift the debt ceiling.

If it isn’t approved, Perryman said there would be exponential negative results.

“You’d see the unemployment rate go up to about 10%, I think, pretty quickly,” said Perryman.

This 10% is for the national unemployment rate.

Perryman says there would also be less investments, less available jobs, and a international distrust of the U.S. dollar.

The deadline to move the debt ceiling is Monday, June 5.