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Dr. Eric Thompson Interviewed on Debt Crisis by KLKN-TV

Dr. Eric Thompson, assistant professor of economics at UNL, was interviewed by Lincoln's KLKN-TV as they looked at potential consequences over the U.S. government failing to raise the debt ceiling by August 2. Although the consequences of defaulting on the debt are serious, Thompson believes the situation will be resolved before the deadline is reached.

"If there is a default on the debt," Thompson told KLKN news, "I would imagine that would lead to a significant disruption in the economy, but I don't know that it would be the same type of very deep recession that we saw in 2009."

Thompson feels it would mainly effect current government spending but not necessarily a doomsday scenario that some are projecting.

"It's not clear that passing this deadline of August 2 would necessarily lead to a default on our debt. It may be possible to continue making interest payments, but cut back on other types of spending.

Thompson also didn't advise people to rush out and take out a loan today just because of the approaching August date.

"There is a significant chance this will be resolved," said Thompson.

He went on to add that life for Lincoln residents probably would not be greatly effected in terms things such as receiving their Social Security checks or current interest rate levels should the August 2 date be missed.

Published: July 15, 2011