\n<\/p>\n
Anne Villamil is nothing if not frank, and her assessment of the federal government\u2019s debt crisis is stark and unequivocal. In her view, failing to raise the current U.S. debt ceiling would result in the United States defaulting on its debt obligation for the first time in history, a “disaster” resulting in \u201ca huge loss [\u2026]\n<\/p>\n
In her view, failing to raise the current U.S. debt ceiling would result in the United States defaulting on its debt obligation for the first time in history, a “disaster” resulting in \u201ca huge loss of reputation\u201d that would “send global markets into a tailspin.”<\/p>\n
Ms. Villamil, an economics professor in the University of Iowa\u2019s Henry B. Tippie College of Business, served as the keynote speaker for the Corridor Business Journal\u2019s annual Economic Forecast Luncheon, which drew more than 600 attendees Jan. 25 to the DoubleTree by Hilton convention center in downtown Cedar Rapids.<\/p>\n
The debt ceiling caps the total amount of allowable outstanding U.S. federal debt. The U.S. hit that limit \u2013 $31.4 trillion \u2013 on Jan. 19, Brookings reports<\/a>, but the Department of the Treasury is implementing \u201cextraordinary measures\u201d so the debt limit isn\u2019t yet binding. The\u202fTreasury estimates\u202fthat those measures will be sufficient at least through early June. Sometime after that, unless Congress raises or suspends the debt limit before June, the federal government will officially default on the nation\u2019s debt obligations.<\/p>\n Congress and President Joe Biden continue to debate possible solutions to the crisis, but as Ms. Villamil noted, the U.S. faced a similar situation in 2011 with similar precursors \u2013 a financial crisis in 2007 that led to a recession in 2008 and 2009.<\/p>\n \u201cWe had accumulated a lot of debt,\u201d Ms. Villamil said. \u201cAnd the idea was, let’s try and lower that by threatening to default. We found a solution (then). But we need a political agreement on how to control spending, account for taxation, and fundamentally focus on economic growth, which means focusing on innovation, the quality of our labor, and our capital markets. We can do it because we’ve done it before. We\u2019ve got to compromise.\u201d<\/p>\n Ms. Villamil<\/a> also said the U.S. economy is not yet in recession, and \u201cpersistent growth\u201d following the economy\u2019s post-COVID decline is a positive sign for the future. She noted that the Federal Reserve has aggressively targeted high inflation through a series of interest rate hikes, and in response to an audience question, she said she expects commissioners to continue targeting an ongoing goal of lowering inflation.<\/p>\n \u201cI actually have a lot of faith in the Fed,\u201d Ms. Villamil said, noting that the Reserve\u2019s Board of Governors and 12 regional banks comprise an organization with a \u201cclear mandate\u201d of price stability.<\/p>\n \u201cThat’s why the Fed at every turn says we must get back to 2% (inflation), because that is the Fed\u2019s job, and (Federal Reserve chairman) Jerome Powell has been honest about the \u2018choose your poison\u2019 alternative,\u201d she said. \u201cNo one wants a recession. No one wants inflation. But if he needs to make the choice, he’s indicated that we would have a recession in order to get the economy back on stable ground. You can talk a lot about regulatory failures, but when we had a financial crisis, the Fed came up with many many innovative policies to stabilize the economy.\u201d<\/p>\n Ms. Villamil also predicted a slight increase in unemployment over the next few years. \u201cThat’s important, because people who have jobs can continue to pay their mortgages and buy consumer goods to keep the economy going,\u201d she said.<\/p>\n Still, she noted that moving forward, the United States must address its \u201cstructural budget deficit, a fundamental imbalance between spending and taxation. And that means that as a country, we’re going to need to make some difficult policy choices.\u201d<\/p>\n \u201cThere are three ways to solve a structural deficit,\u201d she added. \u201cOne is economic growth, another is to cut rates of government spending, and the other is to raise more taxes. And that involves real choices that people need to be informed about.\u201d<\/p><\/div>\n\n Anne Villamil is nothing if not frank, and her assessment of the federal government\u2019s debt crisis is stark and unequivocal. In her view, failing to raise the current U.S. debt ceiling would result in the United States defaulting on its debt obligation for the first time in history, a “disaster” resulting in \u201ca huge loss …<\/p>\n","protected":false},"author":1,"featured_media":47997,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/47996"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=47996"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/47996\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/47997"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=47996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=47996"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=47996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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