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How Do Debt Negotiations Affect Mississippi?

By Daniel Cherry | Published 25 Jul 2011 06:00pm | comments
Credit: Associated Press

With about a week before the deadline for Congress to agree on a debt deal, financial experts are weighing in on potential impacts. MPB's Daniel Cherry reports on what a breakdown in Washington could mean for Mississippi.

If Congress can't make a deal on a debt increase, the U.S. won't have borrowed funds to pay its bills. Dr. Nancy Lottridge Anderson assistant professor of business at Mississippi College. She says like the rest of the country Mississippi would feel the pinch if the rate the U.S. Treasury is charged for its debt goes up.

"If that rate goes up, which it certainly will if we don't reach an agreement, then that's going to ripple throughout our economy. Everything is going to be more expensive, and it's going to be more difficult to get credit than it is now."

A big sticking point in the negotiations is the amount of cuts to federal spending. Dr. Marty Wiseman, the Director of the Stennis Institute of Government says Mississippi stands to lose millions if the cuts go through.

"Mississippi being in many ways, the poorest state in the Union, will feel this percentage wise more than anybody else. Mississippi will stand to take a big hit as compared to some state that's getting dollar for dollar back from Washington for every dollar they send."

The state currently gets about 2 dollars from the federal government for each dollar paid in taxes.

In recent days the negotiations have stalled in Washington. Dr. Nancy Anderson says the stock markets have already seen some effects. She says if no deal is made it's likely stocks will start dropping even more.

"In Mississippi all that translates to certainly our 401Ks if we see the stock market decline, if we see problems in the bond market. Then we're really losing retirement income...potential income."

Dr. Anderson says at the most risk are those with large amounts of credit card debt, although all variable interest rates are subject to spiking if no deal is made.

Watch U.S. Senator Roger Wicker (R-MS) address debt negotiations. 

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Credit: Associated Press


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