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Debt Ceiling Deal Might Affect Hoosiers

Members of Congress are closer to a debt ceiling deal, but experts say the future is still uncertain.

Though final negotiations haven’t been voted on, members of Congress are closer to a debt ceiling deal. But experts say the future is still uncertain.

A government default would hit Americans directly in their pockets. Indiana University economist Todd Walker says higher interest rates would be particularly damaging to the economy during a time when the housing market is still very weak.

“If markets think that there’s some uncertainty, then they’re going to demand a risk premium which is going to drive interest rates higher,” Walker said. “The Bloomington housing market hasn’t been all that volatile, the economy here is still subject to interest rates so interest rates are extremely important to the economy and any increase in interest rates.”

This could lead to higher interest payments on credit cards and higher mortgage payments, even for Bloomington residents.

In the long term, entitlement programs including Medicare and Social Security could see cuts. Because federal dollars are used for student loans, Walker says programs like Pell grants might be slashed in favor of more expensive loan payback options.

Shameka Neely

Shameka Neely, a native of Nashville, Tennessee enthusiastically joined WTIU as Senior Reporter/ InFocus Producer in the news department. She holds a Bachelor of Arts in Organizational and Corporate Communication, with a minor in Marketing and Masters of Arts Degrees' in Administrative Dynamics and Communication all from Western Kentucky University. Shameka also holds a Master of Arts degree in Journalism from Indiana University.

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