There are few signs of progress in the meetings between President Obama and Republican Congressional leaders about the need to raise the federal debt limit.
On Thursday, the president said the two sides were still “far apart,” although he said recent meetings were “very constructive.” For his part, the House speaker, John Boehner, said on Friday that no agreement was “imminent.”
One thing that most officials seem to agree on, however, is that failing to raise the limit by the Aug. 2 deadline will have undesirable consequences. Here are some recent statements by American officials and others on the subject:
“While some think we can go past August 2nd, I frankly think it puts us in an awful lot of jeopardy, and puts our economy in jeopardy, risking even more jobs.” — House Speaker John A. Boehner, July 8
“Potentially the entire world capital markets could decide, you know what, the full faith and credit of the United States doesn’t mean anything. And so our credit could be downgraded, interest rates could go drastically up, and it could cause a whole new spiral into a second recession, or worse.” — President Obama, July 6.
“The United States would be forced into a position of defaulting on its debt. And the implications of that on our financial system, our fiscal policy and our economy would be catastrophic.” — Ben S. Bernanke, the Federal Reserve chairman, July 7.“We don’t need to tell the rest of the world that anytime people in Congress start throwing a tantrum that we’re not going to pay our bills.” — Warren E. Buffett, July 7.
“The debt-ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline, but avoiding even a technical default is essential. This is a risk our country must not take.” — A letter circulated by business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers.
“There is no guarantee that investors would continue to re-invest in new Treasury securities. In fact, some market participants have already indicated that they would be disinclined to do so. As one of the major ratings agencies concluded in a recent report, failure to pay non-debt obligations ‘would signal sever financial distress and potentially imminent debt default,’ prompting the U.S. sovereign rating to be place on ‘Rating Watch Negative.’” — A letter from Treasury Secretary Timothy F. Geithner to Republican senators, June 29.
A few prominent voices have suggested that not raising the debt ceiling, while not ideal, would have acceptable consequences. Here are some of them.
“The Treasury takes in more than enough money from taxpayers to cover interest payments on the national debt. According to the Congressional Budget Office, tax revenue is estimated to be $2.23 trillion in Fiscal Year 2011 while net interest payments will only amount to $213 billion. Even if the debt ceiling remains where it is, there will be more than enough money in the Treasury to make the government’s debt payments, thereby avoiding default.” — A letter to Secretary Geithner, signed by Senator Mitch McConnell, the minority leader, and 16 other Republican senators, May 23.
“My guess is that the bond market would rally as long as it believed the ultimate outcome was going to be genuine entitlement reform — that we wouldn’t even have to find out about a meltdown because it wouldn’t happen.” — Stanley F. Druckenmiller, the retired manager of Duquesne Capital, May 14.
Are there other prominent or notable figures who’ve gone on the record about the consequences of not raising the debt ceiling? Submit them in comments.
Article source: http://feeds.nytimes.com/click.phdo?i=60d89419411bc31142854ee9ae2826d8
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