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UAH Economist Shares His Opinion on the Shutdown, Debt Ceiling Debate

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HUNTSVILLE, Ala. (WHNT) - When the world starts wondering about the stability of the U.S. economy, it costs all of us money.

That’s just one of the many things professor Al Wilhite told WHNT News 19's Steve Johnson on October 16 during a new weekly in-depth interview segment, Leadership Perspectives.

Wilhite, the Chair of Economics and Information Systems at UAH, shares why the debt ceiling is so important and such a bad subject for a political fight.

First in 2011, and then just a couple of days ago; Congress averted a debt ceiling crisis.  President Obama signed the deal to raise the debt ceiling for a few months, ending the crisis, for the time being.

Wilhite said the fact that we had another debt ceiling crisis just a couple of years ago made this latest episode, worse.

"Suddenly all of those bonds that they have that they thought were completely secure, aren't, and so they start saying 'well you have to pay us more interest now,' and just say that because there are contracts, but they start selling this debt around, and suddenly we have a whole new unpriced asset that used to be the most important asset in the world, now perhaps isn't. What's going to take its place?  We don't know,” said Wilhite.

"So now the second time around here, we've seen this before. Is this what we're going to see time after time? Even if we never actually cross the line, but we walk right up to it every time, it's not going to be, that's now who you put your trust in, somebody who plays chicken every six weeks or every six months," said Wilhite.

Wilhite said he's worried no matter which way the world goes with its assets, it will mean bad news for the U.S.

“[Default] is already hurting people around the world, primarily Americans right now. We haven't defaulted, but the very fact that it's plausible as we get closer and closer to it and haven't solved the problem, it becomes increasingly plausible and so the effects start emerging on the American people,” said Wilhite.

However, Wilhite told WHNT’s Steve Johnson that he believes that the U.S. will get a handle on the debt ceiling problem, but that answer will be a short term solution.

Even though things like debt ceilings and government shutdowns feel distant to many Americans, the impacts are very real, according to Wilhite.

“Interest rates on credit cards would start going up, mortgage rates won't be as available as they were and that will happen in a relatively short period of time. Other than that, then it's recession, unemployment would start going back up, firms start shutting down,” said Wilhite.

“How long does it take to boil down to the average person?  It depends on where it is, and what you do. Here in this town, a lot of people working on government contracts, or secondarily through government contracts, we would feel it much more quickly than others. Just like the shutdown had a bigger impact here in Huntsville than it did in other similar sized towns,” Wilhite added.

Steve Johnson posed the question to Wilhite: "At the risk of getting political, when you hear a politician, and there are some who have said this that defaulting or not raising the debt ceiling does not matter, as an economist, what do you think?”

"They're wrong, it's an irresponsible statement. I would hope that our citizenry would send an email saying stop this stupidity," said Wilhite. "This is a problem, and the world hears this and we have heard the chairman of the IMF, we heard Merkel of Germany, we heard the Chinese say people are saying this doesn't matter, we want to tell you, it does matter to us."


    • bob

      James ,Please don’t be silly, this economist makes good money telling libs what to think. why do you think 19 interviewed him?

  • Linda Call

    It seems to me that the economy of the US has gone out of control at a faster rate than any other time in history. Granted we are working with larger numbers millions then billions now trillions. With the larger numbers is there really any way to get in control of the excess government spending we are now in? 4 decades ago government spending was taking monies out of Social Security and spending it in other areas and the conservatives were warning us of what is now happening today. Issues were being made of $5,000 being spent on 1 coffee pot and the like. Is there some way that We the People can see some accountability of the current Obama administration? Why do we have to spend millions of dollars for him to have a vacation?

    Why can’t we charge some import fees on foreign goods? You can’t buy anything that is not ‘Made in China.’ With the lead contamination issues on goods from China, I’m concerned about baby toys but baby clothing and accessories as well. Adult clothing also. You can’t find American made goods anymore. If we would put some import fees on foreign products, we could use that revenue to pay off our national debt. And the fees would help to equalize the prices between imported and products made here in the USA. It would create jobs for Americans and help develop a flow of money in our economy.

    The Space programs contributed much to our ecomony-computers, solar energy, digital watches and more efficient uses of our energy resources just to mention a few, but Obama had to cut the space programs. I would like to know what the motivation to that was. The number of good paying middle class jobs that were eliminated because of this cut is a major factor to our current economic problem. When a layoff occurs it effects more than just the employees who lost their jobs. They don’t have the monies to spend on the goods and services they were once purchasing so other businesses have to make cuts too.

    One more question: Why are lobbyist allowed? They hold the jobs that should be eliminated. The results of their labors are what has caused most, if not all, of the economic collapse.

  • Marcy Andersen

    Gosh, I wish we could have all of our senators and congressman sit down for a 1 hr class in national economics with this guy, Dr Wilhite !! He sure knows how to explain things well.

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