Treasury boss Tim Geithner left no doubt as to the devastation that would be visited on the U.S. economy should Congress fail to increase the debt ceiling.
His warning, designed to scare cantankerous Republicans into compliance with Obamanomics, was quoted, in part, at the reference:
Treasury Secretary Tim Geithner said if Congress fails to lift the debt ceiling and the U.S. defaults on its obligations “this abrupt contraction would likely push us into a double dip recession,” painting the most explicitly dire prediction to date of the consequences of inaction.
In a heavily-anticipated response to Sen. Michael Bennet, D-Colo., who asked Geithner to document the economic and fiscal impacts of failing to lift the statutory debt limit, the Treasury secretary detailed a chain reaction that would cripple the economy, costing jobs and income.
A default would inflict catastrophic far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment,” said Geithner in the letter to Bennet which was dated May 13. “Even a short-term default could cause irrevocable damage to the economy."
Geithner has imposed an August deadline for Congress to lift the $14.3 trillion debt ceiling, but lawmakers are still negotiating over Republican demands to tie the move to spending cuts. And a portion of the GOP still remains skeptical about the need to act by the deadline at all, arguing that the consequences have been overstated.”
With the stakes so very high, one would expect reasonable, intelligent Democrats(if any!) to join Republicans in cutting spending, thereby paving the way for a bipartisan solution that will preserve the credit worthiness of our nation and avert the Armageddon-like scenario envisioned by Geithner.
Besides the alarm sounded by Geithner, the forecast for America’s fiscal health was recently downgraded from “stable” to “negative” by Standard and Poors; again, based on the urgent need to address out-of-control spending.
The big question of the day: Will Democrats “step up” to the plate and act responsibly to reign in spending? Or will they ignore the risk of a double-dip recession and irrevocable damage to the economy by refusing to face reality?
Which will it be, Democrats?
Reference:
http://nationaljournal.com/economy/geithner-predicts-double-dip-if-congress-fails-to-lift-debt-ceiling-20110514
