Congressional leaders are set to meet with President Obama today to discuss raising the debt ceiling and reducing the deficit. University of Wisconsin Economics Professor Andrew Reschovsky has been following the debate closely – and says the economic impact may yet be avoided. “As long as the market in general thinks that nobody in Congress is going to be silly enough to let this happen, than we may see no impact,” Reschovsky says. But if the debt ceiling is not raised by August 2nd, the results could be catastrophic. “Loss of confidence in the business community, investment will stop, hiring will probably decline. A good chance that we would fall back into another recession.”
With President Barack Obama set to meet with congressional leaders today, Reschovsky is hopeful. “Two weeks ago I was very optimistic. I’m a little less optimistic now. In the end I don’t think we’ll have a default. But there’s a little uncertainty in my voice.” Reschovksly says it would be irresponsible if Republican leaders insist that any deficit reduction tied to raising the debt limit be accomplished only through spending cuts.
