As the United States approaches an Oct. 17 deadline for increasing the amount it is approved to borrow, commonly known as the debt ceiling, there has been a lot of speculation about what this will mean for the national and international economy.Assistant Professor of Economics Till Schreiber joined William & Mary News to discuss the potential impacts.
Schreiber finds the confident predictions from both sides of the political debate about the debt ceiling puzzling, instead suggesting that failing to raise the debt ceiling is entering into uncharted waters and therefore unpredictable.
“I would say that I’m relatively confident that I don’t know [what would happen], or that we can’t really know because of the unprecedented nature of the scenario we are currently in,” he said.
He also indicates that these already uncertain effects will be difficult to quantify as a result of the current government shutdown.
“The irony of it all is we really won’t know how much it will affect us because the statistical agencies that collect the data for unemployment rates and growth rates are currently shut down.”
Schreiber has taught at the College since 2006. His research interests focus on applied macroeconomics and he teaches a course in financial crises.
Congress has since passed legislation that extends the debt ceiling until early next year and ends the government shutdown. Schreiber wondered if the extra time will allow politicians to negotiate a more permanent deal.
“I, personally, don’t see what the patterns of a deal may be, the bipartisan commissions haven’t done particularly well in the past in reaching agreement on ‘reform’ or a budget. Maybe this was the wake-up call for whomever you blame for gridlock/excessive partisanship/failure of leadership? Otherwise the drama will go into its next act early next year when we might have another shutdown with a debt ceiling being reached a couple of weeks afterwards. Policy uncertainty will not go down dramatically, I’m afraid.”