Valley charities gauge impact of U.S. debt crisis - 21 News Now, More Local News for Youngstown, Ohio -

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Valley charities gauge impact of U.S. debt crisis

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YOUNGSTOWN, Ohio - The deadline to raise the amount of money borrowed by the United States to pay it's debts is October 17; and without Congress raising the debt limit there is the potential for cuts to Medicare, Medicaid, Veteran's Pensions and other benefits.
 
The President of United Way of Youngstown and the Mahoning Valley, Bob Hannon, says the need is great here in our region. 
 
Hannon says agencies they serve have not seen a major increase in need 8 days into the government shutdown.
 
However, the United Way is preparing in case the government stalemate continues. The organization accepted a donation of more than $6,000 from the new Pizza Hut in Hubbard on Wednesday.
 
Hannon says he believes the worst part of the recession is behind us, but adds there is still a lot of people struggling and the United Way is working to avoid that.
 
The Veterans Affairs Secretary says if the government shutdown continues to the end of October, about 3.8 Million veterans won't receive disability compensation next month.
 
In addition, the International Monetary Fund Financial Counselor says if Congress fails to raise the borrowing limit, and the U.S. defaults, there would be a "worldwide shock" that would threaten the global economic recovery.
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Second Harvest Food Bank Director Mike Iberis tells us that the food bank distributes about one million pounds of food every five weeks in the Tri County area.
 
He says the Food Bank will be able to meet the needs of people through December and is preparing for a possible increase in need.
 
Iberis has confirmed that the USDA orders they have made will arrive on time between now and through the end of December and that Second Harvest would depend on it's national donors and purchase programs saying the private sector companies can respond quickly.
 
Dr. Paul Saracic, YSU's Chair of the Political Science Department, says our country is in un-chartered waters; with the sequester, the federal government shutdown, and now the issue of raising the nations debt ceiling.
 
Saracic says our government takes in about $13 or $14 billion on a daily basis but spends $17 billion per day, leaving a $3 billion shortfall.
 
The U.S. still owes $13 trillion dollars.
 
Sracic says the U.S. would not necessarily have to default on it's debts but could pay the interest on them instead.
 
He adds the government would just not be able to borrow more money, which means drastic cuts, or the sequester on steroids. He says the government would have to cut spending by about $3 or $4 billion a day.
 
Sracic says the cost of borrowing money would go up since no one would want to buy U.S. government bonds, interest rates on credit cards would go up and variable rates on mortgage could also increase. He says the stock market could also plummet and people's retirement or 401-k plans could also lose value.
 
The professor of political science says he is hopeful both sides will work to find common ground and solutions.
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