The pros, credit rates for Oklahomans are in balance with the debt vote; senators cite reckless spending in opposition | New


The country’s default on its debt is a crisis that many experts say will be catastrophic not only for the country as a whole, but also for the cities of Oklahoma.

The United States is expected to hit the debt ceiling on October 18; the Senate will vote on Wednesday on whether to raise it.

Shown is Senator Jim Inhofe, R-OK.

Raising the debt ceiling does not allow the government to spend more money; instead, it allows the government to borrow money to pay for things the government has already agreed to spend. Failure to raise it could pose serious problems for the economy, said Michael Crespin, director and curator of the Carl Albert Center at the University of Oklahoma.

“If we don’t increase this debt ceiling, the Treasury will no longer be able to borrow money and meet its financial obligations,” Crespin said. “Some of these bonds are things like interest on bonds that people buy. People buy these bonds with the expectation that the government will pay back the interest. It is traditionally an incredibly safe investment, the interest rates are usually quite low.

Pompeo Lankford

Former Secretary of State Mike Pompeo, right, listens to Senator James Lankford, left, R-Okla., Answer a question for the media ahead of a forum August 18 in Edmond.

Oklahoma Sens. Jim Inhofe and James Lankford plan to vote against raising the debt ceiling over what they say is reckless spending on behalf of Democrats. All of the state’s U.S. officials voted against the proposal on September 29.

Experts compare the debt ceiling when an individual borrows money from the bank. The borrowed money eventually has to be paid back, but if someone defaults on that payment, their reliability suffers, hurting their chances of getting future loans, experts say.

“If you took a loan last year and borrowed $ 100, and then you had to pay it off today for, say, $ 102, because there’s maybe 2% interest, you say that the way you would pay that off would be from issuing new debt for $ 102, ”said Greg Burge, chair of the economics department at the University of Oklahoma. “So somebody else buys this new bond from you for $ 102, and you just take payment for it and give their money to the other person. But what we’re up against right now is a scenario where we’ll kind of hit our limits in terms of how much debt we’re allowed to issue. “

The entire country benefits indirectly from the security of the economy, Burge said – the default on the debt could have a ripple effect, making the failures of those in Washington DC feel on the people of Oklahoma.

According to Treasury Secretary Janet Yellen, if the country defaults on its debt, adults on Social Security could see their payments delayed, the military wouldn’t know when their paychecks were coming, interest rates on credit cards. credit, auto loans and mortgages would increase, and payments would become much more expensive.

Burge said he expected the shock of the debt default to be minimal in Norman and throughout Oklahoma. Still, Yellen said a default on the country’s debt could lead to a recession.

While Burge has said he doesn’t believe a recession is likely to happen on October 18, if it does, ordinary people’s lives will be continually put to the test.

“During a recession, over time you would start to see real impacts on people’s lives,” he said. “It might be harder to get a job, or it might be harder for your business to thrive, or it might be harder to achieve the goals you have in your personal life… I could see that stuff. unfold, and I mean, you can easily relate that we’re all better off if we operate in a thriving economy and where we don’t experience an economic contraction. “

According to the Treasury Department, the country’s default on its debt would lead to an automatic downgrade of the US credit rating. It would drive up interest rates for all Americans.

This would make loans to small businesses more expensive, since private lenders would be forced to raise their interest rates. Even loans guaranteed by the Small Business Association would become more expensive, significantly affecting small businesses, according to the department.

Defaulting on debt would break this much-needed lifeline for small businesses already struggling to hang onto exiting the COVID-19 pandemic, said Scott Martin, CEO and Chairman of the Norman Chamber of Trade.

“Access to capital is essential for economic growth and expansion,” said Martin. “Small businesses rely on credit institutions for their lifeline, so it’s very important that capital is readily available and affordable. “

If the rates are too high, it’s not good for the entrepreneur who is trying to start a business and makes people’s dreams of owning a business “all the more unattainable,” Martin said.

Forbes predicts that a default will also lead to higher credit card interest rates, tightening credit markets, falling stock markets and delays in treasury payments, which would be catastrophic for small businesses , said Martin.

“A lot of companies have been living on the border for 18 months,” he said. “They hang on with their fingertips and do their best to survive, keep the doors open and pay their employees. Some of the relief efforts have certainly helped. But the country’s default on its debt could spell the end of many small businesses that just hang on. The government must therefore find a way to rectify this. “

Martin, like much of the Oklahoma congressional delegation, believes the national debt is an issue that has been ignored for too long and needs to be addressed.

Each of the US state officials voted against raising the debt ceiling because the bill made no provision to help reform public spending.

Rep. Tom Cole, R-Moore, has always said he was against passing a “clean debt limit” bill. In 2017, he told MSNBC’s Morning Joe that “a net increase in the debt limit is like having a credit card and saying, ‘I’ve reached my limit, I’m just going to increase the limit without changing. none of my “spending habits.”

Cole also said in 2017 that in order to vote in favor of raising the debt ceiling, the bill must also include policies to curb and reform government spending and debt. Cole’s current position matches his statements from 2017.

“While it’s true that Democrats and Republicans have come together in the past to tackle the debt ceiling, the circumstances were drastically different,” Cole said in his weekly column. Moreover, these efforts were often associated with provisions to reduce the deficit and slow the growth of the national debt, which is not the case with the two measures shelved in the last two weeks. . “

Tom cole

Rep. Tom Cole, R-Norman, reflects on the year in Congress during an interview Thursday.

Congressman Frank Lucas R-Cheyanne has said that in order for him to support an increase in the debt limit, Democrats must abandon their plan for a $ 3.5 trillion reconciliation plan.

“For the sake of our nation’s faith and credit, Congressional Democrats should end their political positions and either begin the budget process to raise the debt ceiling or abandon their reckless tax and spending plan,” Lucas said in a statement. “But in the meantime, Democrats will not get bipartisan support to borrow money to spend historic sums on their partisan reconciliation plan.”

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