Congress and President Barack Obama continue to play an ever-increasingly desperate game of chicken over the nation's debt ceiling as average Americans grow more and more concerned about their personal finances.
In Georgia, people like Julie Brock of Alpharetta, a divorced mother, worries that mortgage rates will skyrocket, making it harder for her to buy a home. Cliff Norris of East Atlanta has an adjustable rate mortgage and is concerned his rate will balloon. Joshua Smith of Atlanta is going to study in the UK this fall and worries the debt crisis will further devalue the dollar, making it less likely he can afford his trip.
Time is not on the side of these real Georgians with real concerns. While there were positive signs Sunday that the White House and Republicans in the Senate were getting closer to a deal, much has to happen before the debt doomsday clock is switched off.
All five Georgia Democrats in the U.S. House opposed the plan put forth last week by Speaker John Boehner, R-Ohio, but if the White House backs a Senate plan that makes it through that chamber, Georgia Democrats could conceivably get on board.
Six of Georgia's eight Republican congressmen voted for the debt ceiling plan in the House last week. Two -- Reps. Tom Graves and Paul Broun -- voted against it and are unlikely to support any measure that raises the debt ceiling. U.S. Rep. Tom Price, R-Ga., on Sunday wasn't willing to commit to supporting another plan until he sees details.
"We'll have to see what it is," Price said.
But Graves, a favorite of tea party voters, told Fox News later Sunday that he would not support the new Senate-backed plan.
"When you look at this proposal, both the Boehner plan and this proposal, their solution doesn’t match the enormity of the problem we face," Graves said. "If the goal is to reduce our debt load and our dependcy on China, then these are not the proposals for that. We have to have significant spending limits today."
Graves acknowledged that House leaders were bringing pressure on members to support a deal, but Graves said he wasn't sent to Washington for a "group hug."
But that's cold comfort for many watching anxiously.
For Brock, default could mean putting her dream of homeownership on hold. She hopes to buy the home she's renting from her parents, but she's worried that if the country's credit rating is downgraded she won't be able to afford the loan.
“[The debt issue] feels like a ticking time bomb … is it going to be as bad as people are saying, or is it political nonsense?” said Brock, who works for a credit union. "It’s making me scared. I can’t afford to pay what interest rates used to be on a home.”
Norris is watching the debate in Washington with a sense of dread. He and his partner have an adjustable rate mortgage that could spike if interest rates balloon in the fallout.
"We are just in the process of comparing rates,” he said. “Right now we have to do it in a few days, instead of a few weeks.”
Norris said the wrangling in Washington has him frustrated with the country’s leaders.
“When they started talking about this a couple months ago, everyone said Congress will do something, that they’ll reach a deal and won’t let a default happen,” he said. “But now I think they are going to let it actually happen … Don’t they know they are playing with people’s futures, retirements, savings?”
Smith has kept a close eye on the value of the dollar, which could decline under a default. He is preparing to start a study abroad program at the University of Nottingham. While he's cobbled together scholarships and grants to cover his tuition, he's concerned British pounds will swamp the dollar.
"Being on the dollar myself in a foreign country -- that’s going to hurt me being on a set budget for an extended period of time," said Smith, who plans to study American politics and history. "I have enough for housing and food and stuff like that but I’d rather not have to be sitting in my room the whole time while I’m over there."
U.S. Sen. Johnny Isakson, R-Ga., said the two sides appear closer to an agreement.
“We are not that far apart,” Isakson said from the Senate floor Saturday. "There’s irreparable harm that can come from a failure to act. ”
Isakson said Washington appears "paralyzed by analyzing our differences and failing to look at what we’ve reached common ground on already. I have been worried about a default on our debt for some time but right now, I am worried about Congress defaulting on our country. Failure should not be an option for us.”
U.S. Sen. Saxby Chambliss, R-Ga., told Jamie Dupree of AM 750 and 95.5 FM News/Talk WSB that finishing touches were being put on the bill Sunday afternoon.
Chambliss said he liked what he was hearing, but would not say he would support the final plan.
"What the deal is, is still up in the air," said Chambliss. "I'm not going to make a commitment on it until I see what it is."
And until any deal is signed by President Barack Obama, failure is still possible.
Tony Plath, a finance professor at the University of North Carolina at Charlotte, equated the nation’s economy to a person struggling to tread water. A failure to raise the debt ceiling, and a subsequent default on the nation’s debt, would tie an anchor to the economy’s legs.
“It will sink this economy back into a recession,” he said.
Adrian Cronje, chief investment officer at Balentine, an Atlanta-based investment advisory firm, said the debt ceiling debate brought to the fore a fiscal crisis that has loomed for decades.
“In the developed world, the U.S. and Europe, the bills of the past 25 years are coming due,” said Cronje, describing government spending on entitlements as “unsustainable.”
The stress on the public sector will only increase as Baby Boomers retire.
“This ought not to be a surprise to anybody,” he said.
Domestic debt, bonds and even the dollar, he said, aren’t the safe havens for investors they used to be.
Cronje said his firm has advised high-net worth clients and institutions for the past 18 months to diversify their holdings beyond traditional bets into emerging foreign markets, foreign currencies and gold bullion.
Investors need be nimble, he said.
Though Cronje said immediate austerity could be dangerous, the debt debate will force earnest dialogue about spending, long-term entitlement reform as well the tax code.
The threat extends to corporations, too, and not just individual investors. Georgia Power, owned by Atlanta-based Southern Co. is part of an estimated $14 billion nuclear expansion project at Plant Vogtle, for example.
The company is responsible for $6.1 billion of that project. The utility can borrow up to $3.4 billion in federal loan guarantees for its part in building two reactors.
Southern Co. CEO Tom Fanning told The Atlanta Journal-Constitution last week that his company is actively lobbying in Washington for a deal that includes spending cuts. Fanning said he knows Southern and its utilities in Georgia and three other states will fare well through this economic uncertainty because of the company’s high bond ratings and conservative business model.
“We think that serves us exceedingly well in this environment,” Fanning said. “Particularly when you see dislocations in the financial markets, the people who are hurt the first and the worst are those who have poor credit quality. Southern Co. performs extremely well during that time.”
Allan Minter, with Harry Norman Realtors, said that while overall, July was a great month for him, he has had several couples who halted their plans to buy until talks on the debt ceiling are resolved.
“When you watch the news, it seems like Tuesday will be the apocalypse. It’s hard to know what to believe,” Minter said. “I have two sets of qualified buyers who are literally waiting until Tuesday to decide whether to buy a house.”
Staff writers Katie Leslie, Rachel Tobin, Scott Trubey and Kristi Swartz contributed.
About the Author
