Debt crisis looms over American economy

US Treasury Secretary warned the Congress "playing with fire”

Debt crisis looms over American economy

World Bulletin/News Desk

As the US government shutdown nears its first complete week, America quickly finds itself racing towards an increasingly unstable economic future.

“I'm telling you that on the 17th we run out of our ability to borrow. And Congress is playing with fire if they don't extend the debt limit. We have a very, very short window of time before those scenarios start to be played out,” said US Secretary of the Treasury Jack Lew Sunday in an interview with CNN.

The Treasury Department has said that it will reach its $16.7 trillion debt limit on October 17 if Congress fails to reach an agreement to increase America’s borrowing cap. If Congress cannot reach an accord, it would mark the first time in history that America would default on its debt.

US President Barack Obama said that a default in combination with the current shutdown would bring the US to an “economic shutdown”.

“We can't [threaten] an economic catastrophe in the midst of budget negotiations. So authorize the Treasury to pay America's bills. Pass a budget, end the government shutdown, pay our bills and prevent an economic shutdown,” said Obama Monday at FEMA headquarters.

A senior White House official said Monday that the administration was open to a short-term deal to raise the federal borrowing cap.

“It is the responsibility of Congress to decide how long and how often they want to vote on doing that, the important thing is that they not threaten default and that they not put our country on the brink of that,” said Gene Sperling, the National Economic Council Director. He added that a long-term increase would improve America’s economic outlook.

Speaker of the House John Boehner, however, has insisted that there aren’t enough votes in the House to pass a debt limit increase that doesn’t include other policy concessions.

“We are not going to pass a clean debt limit. The votes are not in the House to pass a clean debt limit,” said Boehner Sunday as House Republicans continued to wrangle with the Democrat-controlled Senate and White House over the funding of the government.

Jay Carney, the White House Press Secretary, reiterated Monday the Administration’s position that the debt limit discussion should be absent of other political considerations.

“Our position is this is too important to attach political demands, demand political concessions in return for fulfilling the responsibility by Congress to ensure we pay our debts and we do not default,” remarked Carney.

Still, any default could trigger an economic catastrophe that dwarfs the economic damage that the current government shutdown continues to bear. 800,000 federal employees are currently under furlough across the nation.

Speaking with CNN Monday, Democratic Senator Charles Schumer said, "The economy could collapse. Will it? No one's certain, but there's a high enough chance that no one - no one - should risk it.”

Last Mod: 08 Ekim 2013, 09:44
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