BOZEMAN, Mont. - The government shutdown is not the only thing looming in Washington D.C. as the deadline for dealing with the debt ceiling inches closer. If federal lawmakers do not raise the debt ceiling, the U.S. will default on its debt for the first time in history.
The United States is reaching its breaking point in terms of how much money we can borrow from any source as we near our limit of 16.7 trillion dollars.
President Obama says the consequences of not raising our nation's debt could be huge.
"If Congress refuses to raise what is called the debt ceiling, America would not be able to meet all of our financial obligations for the first time in 225 years," said Obama.
But republicans say they think there's a better solution.
"On the debt limit we're going to introduce a plan that ties important spending cuts and pro-growth reforms to a debt limit increase," said Boehner.
The debt ceiling is a limit set by congress. It is the maximum amount of money our country can borrow from any source. Similar to a person reaching the maximum spending limit on a credit card, then asking the credit card company to raise the borrowing limit.
To figure out how this deadline could impact people here in Montana, we spoke to Vince Smith, professor of economics at MSU. He tells us if congress defaults, interest rates could rise.
"If you get to borrow, you will likely be charged a higher interest rate because you are viewed as a more risky borrower," said Smith.
This means it could be harder for you to make any purchases through loans or credit.
"To reduce the ability of the average Montana family to buy a home, to buy a new car, or to use credit to acquire goods and services," said Smith.
There is also the possibility the government will makes cut spending on certain programs like social security, food stamps and student aid.
"If the government has less dollars to spend, they are going to spend less in every state including ours," said Smith.
With our nation in the middle of a government shutdown,and the clock ticking on a deadline for the debt ceiling decision, Smith tells us what he thinks this says about the state of our economy.
"It says much less about the productive capacity of the United States, it says a lot about the political failure in Washington D.C.," said Smith.
According to the U.S. Department of Treasury's website, since 1960, Congress has acted 78 times to raise, extend, or revise the definition of the debt limit. Officials from both sides of the political aisle are expected to meet on Thursday to discuss possible solutions. The deadline they are facing is October 17th. Some experts say a short term extension is possible.