If Congress and the White House don't reach a debt ceiling deal, the United States could face a major crisis, according to UNC Greensboro economist Dr. Dave Ribar.
"It's the shutdown on steroids," he explained.
Dr. Ribar says after October 17, the federal government has to stop spending because it will run out of money to pay the bills.
"Since may the government has been using what are called 'extraordinary measures' to shift money from one account to another to another to another, to pay its bills," Ribar said.
So, what will happen after September 17? Businesses and consumers will pull back and spend less. The government has to stop spending money. The United States will default on debts and obligations. Interest rates will go up, and it will be harder for the country to borrow money. There may be world-wide financial collapse, because the U.S. would now operate in a global economy.
"Some say the federal government should cut the credit card if it can't pay its bills. The other side of the argument is--the government has so many obligations cutting the credit card now could result in an economic disaster," Dr. Ribar explained."This would be a contraction in the economy, and you will see unemployment shoot back up almost immediately."
He says the easiest way to avoid a debt ceiling crisis, is to raise the ceiling.
Congress has raised the debt ceiling 78 times since 1960.