Fiscal Responsibility

Stark Warnings Continue to Mount Against GOP Default Game

Today, Republicans are expected to get an earful from financial experts and economists criticizing the reckless game they're playing with the US economy by not taking action to ensure America can pay its bills. According to the Hill:

“The financial sector plans to deliver a blunt message to Congress Thursday: quit messing around and raise the $16.7 trillion debt limit.”

The heads of some of the industry's most powerful groups are prepared to offer an unflinching message to the Senate Banking Committee, warning that even the threat of a default could upend markets, drive up costs and throw the world's confidence in the United States into doubt.

“According to prepared testimonies made available by the committee, the officials will rattle off a host of ways a failure to raise the debt ceiling could wreak havoc on the economy.”

The housing market would be battered, costs for a host of financial products used by all Americans would spike, and financial markets would have almost no idea how to conduct themselves in a landscape where the world's most stable security — American debt — has become unreliable, they will say.

’The damage of a default — or even of a second near-miss in a little over two years' time — would be visited upon every American … Make no mistake, that is an event our nation must avoid,’ said Paul Schott Stevens, president and CEO of the Investment Company Institute, according to prepared testimony.”

“Frank Keating, the head of the American Bankers Association and the former Republican governor of Oklahoma, will warn that this year's debt limit fight is a bigger threat than 2011's, and that the U.S. will not recover quickly if the brinksmanship goes too far.”

“‘We are much closer to disaster this year than we were just over two years ago when the debt-ceiling standoff caused economic uncertainty to spike, consumer confidence to plummet and stock prices to spiral downward,’ his testimony states. ‘If Congress fails to act and we hit the debt ceiling we will set off a chain of events that will cover our entire economy and impact all Americans. These impacts would not be easily reversible.’”

The recovery of the housing market, which constitutes a huge portion of the economy, will be put in ‘serious jeopardy’ if the debt limit is not raised, according to Gary Thomas, head of the National Association of Realtors.”

’An actual default by the federal government along with a protracted government shutdown could have serious implications on the U.S. economy and may result in a recession even more severe than any since the Great Depression,’ he will warn.”

“Ken Bentsen, the president of the Securities Industry and Financial Markets Association, plans to tell Congress that the financial industry has prepared as best it can for the government potentially not paying all its bills. But even he will warn that it is impossible to prepare for something that has never happened in the entire history of the United States.”

“‘No amount of planning can identify and mitigate all of the potential short and long term consequences of a default,’ his testimony states. ‘Unnecessarily triggering a historic default will result in dramatic, and possibly permanent damage to our economy and markets, in ways both anticipated and unanticipated.’”

“Keating will contend that even the prospect of a default would be ‘massively disruptive to our economy.’”

’A default, or even the perceived threat of a default, could result in a harsh and long-lasting recession, which may be even more severe than the previous economic downturn,’ will add Thomas.”

We hope this blunt testimony will finally get Republicans to stop putting the nation's economy at risk over partisan goals.