Ron Johnson Downplayed the Consequences of Failing to Raise The Debt Limit. Johnson said, “I am a little bit cynical about the scare mongering and putting America’s back up against this Aug. 2 deadline just to get an increase in the American credit card.” [Roll Call, 7/18/11]
Rep. Todd Rokita (R-IN) “I Am Not Worried About Moody’s.” Rokita said, “I am not as worried about Moody’s or anyone else as this economy gets worse.” [ABC NEWS Topline, 7/18/11]
Rep. Todd Rokita Doesn’t Believe the US Will Default if We Don’t Raise the Debt Ceiling.
QUESTION: Is August 2nd an important date in your mind?
Rep. Rokita: Of course. But I don’t take the premise that we’re going to default on our obligations. [ABC NEWS Topline, 7/18/11]
THEY SHOULD REALIZE THE DIRE CONSEQUENCES OF A DEFAULT:
Default Could Cost Raise Interest and Mortgage Rates And Cost Economy 800,000 Jobs Every Year. “A serious and extended debt ceiling breach could lead big U.S. bond investors such as China to demand higher interest rates, which would in turn mean higher borrowing rates for businesses and consumers. That would inevitably lead to slower economic growth, fewer jobs, higher mortgage rates and perhaps a prolonged double-dip recession — or even a depression. The long-term damage of even a slight increase in interest rates could be enormous. It could cause a 1 percent increase in interest rates that economists said could shave nearly 1 percent off economic growth and cost 800,000 jobs every year.” [Politico, 7/18/11]
Warren Buffett Called Risking Default Playing With Fire. “On the other hand, you’re playing with fire when you don’t need to play with fire. 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.” [CNBC, 7/7/11]
Former GOP Senators Howard Baker and Nancy Kassenbaum: We Need To Avoid Another Economic “Earthquake” From Default. “The prospect of default on the sovereign credit of the United States of America is so frightening, so significant, so sinister and so far-reaching in its impact that we can’t fail to deal with this issue. … the question is not really the debt limit but, rather, the fundamental commitment to honor our obligations. It’s about recognizing that the last thing a tenuous and fragile recovery needs is another earthquake, a wave of fear in the private sector that further inhibits job creation.” [Washington Post, 7/17/11]
Fed Chairman Bernanke: Default “Would Throw The Financial System Potentially Into Chaos.” ”Federal Reserve Chairman Ben Bernanke certainly drew a dire picture in testimony before the Senate Banking Committee on Thursday. He said a default would be a ‘calamitous outcome’ and ‘create a severe financial shock.’ The global financial system relies on Treasuries, backed by the world’s largest economy and long considered one of the world’s safest bets. ‘A default on those securities would throw the financial system potentially into chaos,’ Bernanke said.” [AP, 7/17/11]
The Head of the IMF Said Default Would Be “A Real Shock,” “Bad News for the U.S. Economy.” On ABC’s This Week, IMF Head Christine Lagarde Said “It would be a real shock, and it would be bad news for the U.S. economy. So I would hope that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also of the rest of the world.” [This Week, 7/10/11]
Moody’s Economist Mark Zandi: Failure To Raise the Debt Ceiling Would Throw The US into a Recession. At a Breakfast, Moody’s Economist Mark Zandi said, ““Even if Congress and the administration reverses themselves days later I think the damage will have been serious and we’ll probably be thrown into a recession.” [The Hill, 6/28/11]
235 Economists Including Six Nobel Laureates: Failure To Raise The Debt Ceiling “Could Push The United States Back Into Recession” ”We, the undersigned economists, urge Congress to raise the federal debt limit immediately and without attaching drastic and potentially dangerous reductions in federal spending. Not doing so promptly could have a substantial negative impact on economic growth at a time when the economy looks a bit shaky. In a worst case, it could push the United States back into recession.” [Economists’ Letter to Congress, 6/29/11]
Former Bush Treasury Official: An “Unprecedented” Failure To Raise The Debt Ceiling Could Push The Economy Back Into A Recession. Former Undersecretary of the Treasury for President George H.W. Bush Jerome Powell, “who spoke to House Republicans on Friday, said that if no deal is reached by the time the Treasury needs to pay interest and principal on its outstanding debt, the government would struggle to pay for much else — a spectacle that is ‘completely unprecedented’ and could spook investors. ‘So we service the debt and then we don’t service 50 percent of our remaining obligations, [such as education, social safety net and other programs] and that 50 percent is what the public sees,’ Powell said. ‘This gigantic cut in government spending is going to be a major negative shock to the economy, and it could push the economy back into recession.’” [Roll Call, 7/18/11]