If you think the government shutdown is bad, things could be much worse. And the U.S. is approaching that worst case scenario. Legislators have until October 17th to raise the debt ceiling. That's how much money the U.S. can borrow to fund spending Congress already approved. As our Katie Gibas reports, if Congress doesn't act, the consequences will be felt around the globe.
UNITED STATES -- The warnings have been voiced again and again that every day the government is shutdown is one day closer to catastrophic consequences for both the United States' and global economies.
"I think it's totally unnecessary. It's harming an economy that could use all the help it could get," said Don Dutkowsky, a Syracuse University Maxwell School Economics Professor. "It's not a good statement about how our government has been operating, especially when we have real problems out there."
But overshadowed by the debate over a government shutdown is a much larger issue with greater consequences for the economy. The debt ceiling must be raised by October 17th or the federal government could default on its obligations.
"It's only been recently, over the last few years, that members of Congress, particularly the Republican Party and the House, have decided to use the debt ceiling as a way to try and negotiate over broader issues," said Daniel McDowell, a Syracuse University Maxwell School Political Science Professor.
Experts say the debt ceiling is far more critical to the economy than the question of a shutdown.
"We'll have government workers continue to be laid off or furloughed. And we'll have the national parks and museums closed. Frustrating, especially in a sluggish economy, but we can deal with this," said Dutkowsky. "The debt ceiling in mid-October is another story. Then we're talking about the implications of payments on our obligations, to our Social Security, to our Medicare and bond holders. And that has much more severe repercussions."
House Speaker John Boehner reportedly says he will not let the country go into default. But the debate opens the door to new battles over spending, especially the Republican goal to defund and delay the Affordable Care Act. It would be the first time the U.S. has defaulted on its obligations.
"Essentially, it would be we're defaulting because we're not allowing ourselves to borrow, not because other creditors are unwilling to lend to us. So it would be a very unique default, so the consequences of it are unknown," said McDowell.
The last time the debt ceiling was the subject of a Congressional battle was in 2011. Even though the House eventually agreed to increase the ceiling, the brief standoff did damage. Some of the bond rating agencies downgraded the U.S. bond rating, which increased interest rates and made it harder to borrow money.