MSU professors and students were anxiously awaiting the outcome of a last-minute, Wednesday night effort to help the U.S. avoid reaching the debt ceiling and defaulting on its loans.
Reaching the debt ceiling could have lead to a national catastrophe, experts said. On Wednesday night, Congress approved a deal allowing the U.S. to avoid default, a measure that was being debated in the U.S. House late into the evening.
Even if a compromise is made, MSU professors said that the long impasse could leave behind lasting scars that would impact Michigan and the rest of the country.
The standstill has been largely blamed on a lack of compromise between the two parties. Strict demands from both sides of the aisle might create barriers for a compromise, tarnishing the government’s reputation.
“The country is experiencing a lack of faith in government generally from the impasse,” political theory and constitutional democracy professor Benjamin Kleinerman said. Kleinerman believes this lack of faith extends into Michigan politics as well.
“It’s going to come down to the 2014 election — I think it will negatively affect Republicans,” Kleinerman said.
The Republican party has a majority in the U.S. House of Representatives, and is largely blamed for using their power to force the shutdown and debt ceiling standstill.
Students as MSU also are noticing political disputes.
“The partisan bickering is not helping,” James Madison freshman Tyler Silvestri said. “They are handling this the wrong way.”
Silvestri said he cannot believe the problems have progressed to this point.
“The fact that the government shutdown is even happening is appalling,” Silvestri said.
He believes the Republicans can push for reducing debt, but should first raise the debt ceiling to prevent default.
“Both parties can’t compromise at all,” said pre-med sophomore Duke Lee. Lee thinks with problems like these, the government just needs to come to an agreement.
Political scars are not the only ones being left behind after this controversy. With the integrity of the nation’s debt on the line, the economy also has been affected.
“The government shutdown and debt ceiling are all part of the same crisis, and it has already had an effect on the economy,” economics professor Charles Ballard said. He said that most of what Michigan does in terms of state programs is put on by the state, but paid for by the U.S.
With the government running out of money during the shutdown, the state has to make some tough decisions, Ballard said.
“The state budget director and Governor Snyder have been looking at the balances in their accounts and are planning for when to cut off programs,” Ballard said.
The problems that arise after a compromise might seem bad, but Ballard said if the government defaults, it will be much more problematic.
“If we default, it would create catastrophic effects on markets generally — bonds are the country’s biggest single asset,” Ballard said. Ballard said that the United States has a reputation of always paying back its loans, but a default would create a loss of trust for foreign and domestic investors.
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