Experts: Be Very, Very Afraid of the Debt Crisis

Top U.S. officials and economists say the global economy will take a much bigger hit than it did during the recession

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Mike Theiler / Reuters

A fence surrounds the U.S. Department of Commerce in Washington October 5, 2013, as the government shutdown continues into the weekend.

With no end in sight to the current budgetary impasse, Congress has a ten-day window to approve measures that would allow for the extension of the nation’s debt ceiling. If both the House and Senate fail to forge a deal before 0ct. 17, experts warn that the self-induced crisis would surpass the 2008 recession in its effects.

Tim Bitsberger, a former aide to George W. Bush, said during an interview with Bloomberg published today that a potential U.S. default on its debt “would blow Lehman out of the water” — a reference to the investment bank collapse that spurred the 2008 financial crisis.

“Lehman was an isolated company, and now we are talking about the U.S. government,” Bitsberger told Bloomberg.

(MORE: Shutdown Dents Vital Obama Foreign Policy Goal)

U.S. Treasure Secretary Jack Lew voiced similar sentiments as he made the rounds of national talks shows Sunday. During an interview on CBS’s Face the Nation, Lew quoted former President Ronald Reagan as saying the implications resulting from a U.S. default on its debt payments “are impossible to predict and awesome to contemplate.”

While the Secretary slated House Speaker John Boehner’s collaboration with hardline elements within the GOP, Lew called on President Obama to reach out to more moderate figures within the Republican Party.

“You know, the problem isn’t the President’s willingness to negotiate, the problem is we have not yet engaged with Republicans who are willing to put everything on the table and the Speaker knows that,” said Lew.

With the possibility of a financial calamity looming, Boehner stuck to his guns on Sunday and said he would not allow a vote on a clean funding measure until the Obama administration agrees to discuss delays to the implementation of the Affordable Care Act. However, analysts claim the clean bill could end the shutdown and it has support from more moderate Republicans.

As the federal government shutdown enters its seventh day, the website for the federal AMBER Alert program became the latest fatality after it was axed on Sunday night. According to the webpage, “due to the lapse in federal funding, this Office of Justice Programs (OJP)” website is now unavailable. The AMBER Alert program serves as bridge between law enforcement agencies and broadcasters and allows for the immediate publication of bulletins concerning child abduction.

MORE: Treasury Head Says Congress ‘Playing with Fire’ on Debt Ceiling

3 comments
PaulSilvan
PaulSilvan

President Obama will exercise executive privelege and raise the debt ceiling without Congressional approval if necessary.

MichaelWhitehead
MichaelWhitehead

I don't believe that Boehner wants to be in the position he is in.  On his own, he would put a clean CR to an up or down vote.  But he knows that by doing so he will have killed his Speakership of the House.  Now we must wait to see how much moral courage he has.  Is he willing to lose his position as Speaker of the House in order to help his Country as a whole?  I doubt it, but anything is possible nowadays.

grape_crush
grape_crush

> Boehner stuck to his guns on Sunday and said he would not allow a vote on a clean funding measure until the Obama administration agrees to discuss delays to the implementation of the Affordable Care Act.

a) I'm wondering how much of this is True Believer-ism on Boeher's part and how much of it is him trying to salvage any credibility Boeher has as Speaker. He can't control his own caucus, so the only thing left for him is to deny an up-or-down vote on pending legislation.

b) Delaying implementation of the Affordable Care Act is akin to boarding a ship that has already set sail an hour ago.