Failure by Congress to raise the debt ceiling could have a significant impact on Louisiana’s economy, local experts say, but such a prospect is unlikely to happen. Robert Newman, professor and chair of LSU’s Department of Economics, says that the chance Congress will not raise the debt ceiling is remote. “They will strike a deal at some point,” he says. “The federal government has tough decisions to make to avoid dire consequences.” But if Congress votes to maintain the current level, Newman says, Louisianans would feel the impact along with the rest of the country. “Our overall rating would go down,” Newman says. “Consumers will pay more for anything with interest. There’s no way for residents of Louisiana to be exempt from that.”
Rajesh Narayanan, associate professor of finance at LSU, says, “The impact on states would be adverse” if Congress opted not to raise the debt ceiling. “Federal transfers to states, including Medicaid and education, would suffer,” he says. “When states budget that money, and it doesn’t come, then they have to bridge the gap. If they can’t, you have cash flow problems.”
James Richardson, director of the LSU Department of Economics, says the state’s workers and various grants would also take a hit. “You have about 32,000 federal employees in Louisiana, and their checks might be delayed,” Richardson says. “Grants to universities, grants to nonprofits, the Coastal Protection Plan—all of that could be delayed, postponed or canceled over time.” Read the full story here. —Ian McGibboney
