As the federal government shutdown continues, one Seattle financial analyst says it could be a prelude to the fight over the nation's "Debt Ceiling."
In simple terms, the Debt Ceiling is essentially our nation's credit limit. We've been borrowing less lately to pay our bills - but we're still borrowing. And if Congress and the President don't do something about it within the next three weeks, we won't have cash on hand to pay our bills.
"I believe we would have created a financial crisis of magnitude in very quick order," says Mike Alfstad of Seattle's Alfstad Capital. "If we have a default, that strips U.S. Treasuries to be presented (as a form of payment to creditors)... it would wreak havoc of a scale far beyond what we saw in 2008."
Alfstad says he's frustrated by what he's seen in Congress so far. "It's too much to expect (Congress) to present credibility and intelligence when it's been so beyond them for a very long period of time." He worries the current budget battle could a preview. "It's impossible to know if the shutdown is part of a larger, or more grand, or maybe more insane tactic around the debt ceiling."
But critics say something needs to be done about our nation's increasing debt. They say many, if not most government programs need to be cut back - and the US should spend what it earns.
On her Facebook page, former Republican Vice Presidential candidate Sarah Palin writes "recall that only Old Mother Hubbard went to the cupboard and cried t'was bare. Today millions see a $4 trillion bloated cupboard overflowing with political goodies to cut."
From his Seattle office, Alfstad agrees it's important the national debt goes down. But he warns that it would be ruinous if the US suddenly lost its abilities to pay its bills.
"It would be catastrophic and very, very destructive," he says. Yet he believes some statesmanship will occur between the two parties and disaster will be diverted. "We've never been threatened by this to this degree, and I do believe that is recognized. And therefore, we're not even assigning a five-percent probability to (debt ceiling default). We're assigning a one-percent probability to this."
In other words, Alfstad is counting on Congress to do something it hasn't done in a long time: come to an agreement over how to spend our money.