Local officials will be watching closely as Congress expects to vote to raise the debt ceiling this week. President Biden and House Speaker Kevin McCarthy finalized details of a measure Sunday night that, if passed, will raise the debt ceiling and avoid default.
The House now has less than 72 hours to pass the measure and forward it to the Senate. If the federal government defaults on its debt, it could impact Washtenaw County.
The difficulty with predicting what will happen if our country fails to pay its debts is that it has never happened before. Some experts have said the best comparison is how local and state governments would react to a downturn in the economy.
Tina Gavalier is the Chief Financial Officer for Washtenaw County. She says, there are various investments that are held, and a lot of them are in U.S. Treasury and if the U.S. Treasury does default…
“...then people that have already retired depending on those dollars would have an income shortage because they’re not going to get their payment if they try to cash them in.”
Gavalier says if a default would take place, the county government would hold off as long as possible before laying off workers.
The timeline to avoid a default remains tight. Treasury Secretary Janet Yellen says the U.S. will run out of money to pay its bills on June 5th.
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