Obama Warns of Economic Crisis If US Goes Into Default
Washington. President Barack Obama painted a bleak picture of the impact on the United States if leaders in Washington fail to reach a deal to raise the government’s debt ceiling by next week.
He argued Monday night against opposition proposals for a short–term extension of the debt ceiling but did not repeat past vows to veto such a measure.
Obama said during his speech broadcast live in prime time that a failure to act by his Treasury Department’s August 2 deadline would lead to a default on US government bonds. Pensioners, military retirees and companies doing business with the government could all be left empty-handed, Obama said.
“We would not have enough money to pay all of our bills,” he said.
“For the first time in history, our country’s triple–A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet,” he said.
“Interest rates would skyrocket on credit cards, mortgages and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington.” Obama called a default “a reckless and irresponsible outcome” to the current debate, in which the latest dueling proposals – after a series of failed plans – call for lifting the 14.3-trillion-dollar debt ceiling while cutting federal budget deficits in the future.