Senate Democrats

Reid Remarks On The Economic Effects Of Default

“Business leaders are begging us to do the right thing, and do it quickly. In addition to America’s reputation in the world, the bedrock of the global economy is at stake.” 

“Republicans have already done enough harm to our economy with their reckless shutdown designed to undermine the law of the land, Obamacare. But the consequences of a first-in-history default on the debt would be far worse – possibly even worse than the 2008 financial crisis, from which this nation is still recovering.” 

 I say to my Republican colleagues in the Senate, the time for misleading rhetoric is through and the time for responsible leadership is here. Let’s reopen the government. Let’s pay our bills. And let’s negotiate.” 

Washington, D.C. – Nevada Senator Harry Reid spoke on the Senate floor today regarding the catastrophic effects of defaulting on our debt.  Below are his remarks as prepared for delivery:

It can be hard to find common ground in Washington. But there is one thing on which Republicans and Democrats should be able to agree: there is no more important issue before Congress than to prevent a catastrophic default on the nation’s debt.

A default would put our economy in grave danger. I have said it. So have many of my Republican colleagues. And the business community is shouting it from the rooftops. This is what Goldman Sachs CEO Lloyd Blankfein said about averting default:  “While the current government shutdown is unfortunate, the impacts of a debt default would be magnitudes worse and should not even be considered a viable option. The economic damage associated with default or near-default would be severe and have serious consequences for the recovery of the U.S. and global economy.”

Yet some Republicans in Congress are threatening default – and threatening the economy as well – in the hopes of extracting who-knows-what concession this time.

Warren Buffet said using the threat of default to extract political payment, “ought to be banned as a weapon… It should be like nuclear bombs, basically too horrible to use.”

Business leaders are begging us to do the right thing, and do it quickly. In addition to America’s reputation in the world, the bedrock of the global economy is at stake.

Yesterday I introduced a bill that would remove the specter of default and allow the United States to pay its bills with no preconditions or strings attached. Republicans and Democrats may have our differences, but neither side should hold the full faith and credit of the United States hostage while we resolve them.

Let’s reopen the government. Speaker Boehner could end this Republican government shutdown today by letting the House of Representatives vote on the Senate’s clean bill to end the shutdown. Let’s pay our bills. There is no reason for Republicans to drag out this process, and force the nation’s economy ever closer to an economically catastrophic default. And let’s negotiate.

Two-hundred days ago – to the day – Senate Democrats passed a budget that reflected our priorities. Since then, we have asked consent 20 times to negotiate a compromise between our budget and the one passed by Republicans in the House. Democrats are not afraid to negotiate. But we need a dance partner. If Republicans end this irresponsible government shutdown, remove the threat of a cataclysmic default and stop objecting to a budget conference, we can start negotiating today.

Republicans have already done enough harm to our economy with their reckless shutdown designed to undermine the law of the land, Obamacare. But the consequences of a first-in-history default on the debt would be far worse – possibly even worse than the 2008 financial crisis, from which this nation is still recovering. Two years ago, the last time Republicans flirted with this terrible idea, America’s credit rating was downgraded for the first time in the history of our great country.

Raising the debt limit doesn’t cost taxpayers a dime. And Republicans shouldn’t claim it does. That’s certainly not what they claimed when President George W. Bush raised the debt ceiling seven times, increasing the limit by $4 trillion. Congress has raised the debt limit more than 90 times since it was created in 1939, the majority of those times under Republican presidents. Ronald Reagan asked Congress to raise the limit 18 times, twice as many as any other president. Raising the debt ceiling simply allows payment of bills we’ve already incurred – bills for wars and tax breaks paid for with borrowed money.

To even consider defaulting on these obligations, or to use the threat of default to extract concessions, is irresponsible. Just ask Republican Governor Jon Huntsman. This is what he said about the current Republican brinksmanship over default: “It’s pretty sad, pretty pathetic for the greatest economy on Earth to be experiencing this… Russian roulette with our… economy.” He went on to say, “We have to see it as an economic issue… If you think the government shutdown is a big deal, that’s a hand grenade compared to a thermonuclear weapon that would be hitting the debt ceiling.”

Yesterday the Minority Leader suggested that the only way to disarm this weapon is for me to engage in one-on-one talks with the Speaker of the House. I am happy to talk to Speaker Boehner any time. But it is obvious to me that no amount of talking will make the Speaker either willing or able to end this shutdown and prevent a catastrophic default. As my friend, the senior Senator from Arizona, said yesterday, it is time for the Senate to lead.

To that end, the Senate has passed a bill to reopen the government. And Senate Democrats have introduced legislation to avert a default on this nation’s obligations. I say to my Republican colleagues in the Senate, the time for misleading rhetoric is through and the time for responsible leadership is here. Let’s reopen the government. Let’s pay our bills. And let’s negotiate.

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