tv [untitled] August 24, 2017 2:51pm-2:58pm EDT
just explain why the average person should care about this debate over the debt limit. guest: if we don't raise the debt limit, then the government won't be able to pay somebody. we run a deficit about $700 billion a year. that means without raising the debt limit, we won't be able to pay bills worth about $700 billion. that means social security recipients, defense contractors, that means bondholders, a lot of different people.
it will affect everybody there very significantly if we don't raise the debt limit. host: what would it mean for the u.s. federal government, our credit rating if that doesn't happen? guest: not speaking for the rating agency, but i suspect it would mean a lower rating. you can remember back in 2011, we had another scare with regard to the debt limit. we ultimately raise the debt limit before we breached it, but standard & poor's downgraded the u.s. debt at that point in time because of the dysfunction over the debt limit signaled. it's very likely will see other downgrades of we breached it. -- if we actually breached it. host: why do we continue to keep having this debate? are we not raising it far enough? guest: actually, it has been
suspended. it's not a matter of raising the debt limit enough. it's a very bad law. anachronistic and doesn't make any sense. the intent was a good one. the process was that if congress had to vote to raise the debt limit, they would make some tough choices around the nation's fiscal situation. cut spending, raise tax revenues , close that budget deficit, but that's not how worked out. a lot of uncertainty created a lot of angst and at the end of the day, congress votes anyway to raise the debt limit. it's a really bad law. it would really be a good idea to get rid of it. host: you mentioned that angst. one of the headlines from business insider, you also mentioned the end of the day they always raise it. is it really much of a crisis if they always end up raising the debt ceiling? guest: no, if you actually do raise it. it does have a cost.
believe it or not. already, in the lead up to this debt limit increase, which needs to be done according to the treasury secretary by the end of september, we are seeing the impacts in financial markets. they had to pay much higher interest rate for investors to buy those treasury bills. there is a probability out there, doesn't raise the debt limit and these investors don't get their money on time. that is a cost. we as taxpayers are now paying a higher interest to investors than we would've had to otherwise just simply because of the -- developing right now. it is not cataclysmic. it would be if we breached it. just going down this path is costly to taxpayers. host: we invite viewers to join in. mark zandi's chief economist at moody's analytics.
he is here for the next 25 minutes or so to take your questions and comments. republicans at 202-748-8001, -- democrats at 202-748-8000. independent at 202-748-8002. what signals are you reading for congress, how concerned are you right now? guest: because we have seen this script before and we've seen how it ended, the ministers multiply -- administration will ultimately get it together before the end of september, raising the debt limit or suspending the debt limit. i would be shocked if they didn't do it simply because it would be cataclysmic to the economy and financial markets. having said that. there is obviously a lot of dysfunction in washington. there hasn't been a major piece of policy that has gotten through the legislative process
certainly not with economic policy. there is a probability that we mess up here. so, i am concerned about it. with each passing day more. when congress gets back in session, nothing will get done, when they come back in a couple of weeks, pretty quickly we will get a sense of what's going on. how bad this dysfunction is and how significant this disruption could be in terms of the debt limit process. the other big thing that has to happen with legislation that has to be signed is funding for the government. the budget year is over. if there isn't a piece of legislation to sign the government will shut down. we will get a pretty good sense of things in early september and see how it goes than. host: derek is up first from lakeland, minnesota. line for independents.
caller: good morning, c-span. good morning, america. why you keep having mr. zandi on your program. i'm surprised he didn't go to jail. if you know the history of him and you know the crisis of what happened with the housing market, he was in a rating agency that was rating the bonds for mortgage backed securities and they were rated awfully high for a worthless piece of paper that a lot of people got stuck with and i don't understand why you keep having him on here. he should have been in jail. host: let's give them a chance to explain what moody's analytics is and what he does there. guest: i'm not part of the rating agency. i belong to moody's analytics , which is the research arm of the moody's corporation which is an independent division. sarah huckabee sanrs