What does the debt ceiling debate mean for you? - KWWL - Eastern Iowa Breaking News, Weather, Closings

What does the debt ceiling debate mean for you?

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WATERLOO (KWWL) -

President Obama and federal lawmakers are still debating how to tackle the nation's debt crisis.  So if Congress fails to lift the debt ceiling by the August 2 deadline, how does that impact you?

"Not increasing the debt ceiling and certainly allowing a default on the debt would have very real consequences for average Americans," said Federal Reserve Chairman Ben Bernanke.

Those consequences could be wide-ranging.  The stock market would likely go into a tail-spin, affecting the money you invest, including retirement accounts.

"I think you would just have a complete economic fall-out, that would really make 2008 look like a cake walk," said Dave Becker with Financial Resource Advisors.

That could make businesses nervous, keeping their budgets tight, too.

"I think you're going to have a lot of panic.  And any time you have that, you'll have the purse strings for banks, for consumers, for corporations trying to go out and do hiring and things like that, be very much tightened up.  And this is even if we allow ourselves to default for just maybe a few days," said Becker.

That means if you're looking for a loan to pay for college, or buy a home or new car, for example, you could be out of luck.  Over time, if the nation can't pay its bills with a higher debt ceiling in place.  It could also make it tougher for you to pay bills, as interest rates on credit cards and mortgages may also go sky-high.

"I think you'd see banks increasing rates, increasing fees and other things because again, they wouldn't know where they stand," said Becker.

And worst case scenario, if you rely on government cash to live, including anything from Social Security to military pay-- there's a chance those checks could be slow in coming or even stop until a deal is reached. 

While that all sounds pretty grim, many experts do not think Congress will allow the US to go into financial default.  One of the biggest reasons why:  they realize how severe the consequences could be both for the country and politically.  Without a debt deal, voters may be frustrated enough to vote nearly everyone out of office.

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