Washburn professor explains nation’s rising debt ceiling

TOPEKA, Kan. (WIBW) - “All that means is that the federal government can continue to borrow money, and unfortunately we have to borrow money every single day because the old debt comes due, and we’re also spending a lot more than we’re taking in in terms of tax revenue,” said Dr. Sollars, economics professor and Dean of Washburn University’s School of Business.

Dr. Sollars said by reaching an agreement to raise the debt ceiling, the country avoids a worst-case scenario of having to default.”

“Governments take two ways out of that. They can devalue the currency, and that happens in small little countries that we make fun of. Or it happens in a place like Germany after the first World War or some other countries that have tried to do that,” Dr. Sollars explained.

Dr. Sollars said he is keeping a close eye on what will happen to Social Security payments.

“With both social security and Medicare at their current levels in the current structures of the taxes, the expectations for retirements, the revenues won’t be there to pay for those expenses.”

That, and the stock market.

“The stock market doesn’t like controversy like this, especially when we have a somewhat weak economy and where interest rates are rising. So throwing in more anxiety to the mix is probably not good for the stock market,” said Dr. Sollars.

While there is plenty of turbulence nationally, Dr. Sollars said he is hopeful about the direction of the Kansas economy.

“I think some of the new economic initatives, the new battery plant for example, or even closer to home here in Topeka, some of our local companies are growing and that’s a good thing.”

There are about 66 million retirees in the country and almost 2/3′s of beneficiaries rely on Social Security for at least half of their income.

And for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.

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