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