Washington (CNN) - Obama administration officials declared Wednesday that there is no fallback plan if Congress fails to lift the nation's $14.3 trillion debt limit by August 2, and they warned that inaction could spark a series of catastrophic events.
"There really is no alternative to raising the debt limit," one senior administration official said at a briefing with reporters. "There is no plan that can preserve our credit worthiness."
A second senior administration official also pushed back on the claim by Sen. Pat Toomey, R-Pennsylvania, that the administration is using "scare tactics" on the issue and asserted that a failure to raise the debt ceiling would be "disruptive" but not "catastrophic" to the economy.
This second senior official said the White House is closely monitoring the markets already. So far "we are not seeing signs of anxiety and concern" because Wall Street has seen Congress fight about the debt limit before only to see both parties come together in the end without the U.S. government defaulting on its debts.
But this second senior official warned that failing to raise the debt ceiling could in fact be catastrophic, especially after a reporter compared the current situation to the fall of 2008, when the markets were rattled after the House of Representatives initially failed to pass the bank bailout during the financial crisis.
To buttress their point that the debt ceiling must be raised, administration officials are using the words of Treasury Secretary Tim Geithner - as well as one of his predecessors from the Reagan administration.
In a May 13 letter to Sen. Michael Bennet, D-Colorado, Geithner warned that "a default would inflict catastrophic, far-reaching damage on our nation's economy, significantly reducing growth, and increasing unemployment."
Administration officials also released a July 8, 1987, letter from then-Treasury Secretary James Baker urging the Democratic Congress to raise the debt ceiling - or else.
"I cannot overemphasize the damage that would be done to the United States' credit standing in the world if the government were to default on its obligations, nor the unprecedented and catastrophic repercussions that would ensue," Baker wrote. "Market chaos, financial institution failures, higher interest rates, flight from the dollar and loss of confidence in the certainty of all United States government obligations would produce a global economic and financial calamity. Future generations of Americans would have to pay dearly for this grave breach of a 200-year old trust."
From CNN Politics
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It's simple...the GOP will raise the debt ceiling........IF the DEMS agree to cut spending. Why won't they agree to that.......is the question all of you should be asking. WHY WON'T THE DEMS AGREE TO CUT SPENDING? Reason...they WANT the economy to fail. George Soros has been behind other economies crashing....and he & his organizations (see TIDES Foundation & note all of the media influences he has) see OPPORTUNITY in crashing our economy. A chance for "change" – recognize that idea?
"Answer: blame Bush and raise taxes on the wealthy."
Well, that would be accurate and necessary, in that order. Live with it.
"Not true. The government has plenty of assests they can sell."
Indeed...the government SELLS BONDS. Goldman Sachs and others are praying to god on high...and paying to GOPers on high...that the GOP gives them a few days past the deadline for avoiding default without having raised the debt ceiling so they can short the bond market like crazy.
@talanhugh
2010 election spoke loud and clear......
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Correct. JOBS. Not killing Medicare. The will of the people is loud and clear. Raise taxes, not tax cuts.
@Not true. The government has plenty of assests they can sell.
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They need to raise hundreds of billions of dollars. What would they sell? Who would buy it?
Hopefully, this is the final nail in the Tea Party coffin. Now let's watch which extreme Republicans accept this eventuality and flip flop last.
The GOBPbaggers and teatards are truly showing their anti-American colors now. First, they are utterly ignorant about macro economics and act like running a massive country is like running a household budget. Second, they ignore the damage that will occur both internally and internationally if the ceiling isn't raised. Finally, they ignore the history of deficit spending, which is exactly what is needed in a recession. It's almost like they want America to fail. I guess it just shows how much they hate the president, because none of this noise was coming when Bush and the Greedy Old Predators were doing THE EXACT SAME THING!
Plan B is that the U.S. defaults on its debt. Why should the government plan to initiate self-destruction, and global economic crisis? How is it that, with all of the discussion and educational reporting being done on this topic, so many people still do not understand what the debt ceiling represents? It is not as simple as saying that we're just going to reduce future spending – we still owe the debt we have already incurred!
How unfortunate that so much unfunded military action has taken place during the past decade – this is really pushing our financial obligation up.
Let it crash. Maybe the insane 50% plus of Americans who vote Republicans will finally see that they're for the rich only. Of course, if the Repubs think a millionaire or a billionaire might loose a nickel, they'll be all for raising the debt celing.
So what is Obama's plan A? Just keep on borrowing and spending.
@Rudy NYC "People who object to rasing the debt limit are endangering our troops and our national security."
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The debt ceiling isn't the problem. It's the out of control spending by Obama, who has single-handedly increased the debt more than anyone in our country's history. Here's a thought; Spend Less! In the years when a Republican was president it was all Democrats could do to shout "It's the economy stupid!". Well guess what, the Democrats have failed miserably and have zero excuse this time. They had complete control and set the country into economic peril.
To all pro debt ceiling increase. Guess why gas is $4? Groceries are on the rise? Unemployment so high? YES, the debt we spent more money on interest than paying it down. In 2008, our debt was $10.5 trillion and in less than two years of Obama $14.11 trillion.
The national debt was sent into orbit by Bush who didn't even get anything out of it in terms of the economy or national security. Now, somehow, it's Obama's fault that he didn't rebuild the entire country in under two years. I guess we could blame him for not having been elected earlier than 2008.
60 months ago when the Demorats began controlling congress in 2006 our debt was $9.13 trillion, we know the rest after four years Democratic control.
This shows you how stupid our government things we are. This according to the Obama administration is like say ( OK people, )If your in Debt go to the bank and borrow more money. That is exactly what the moron Obama administration is saying because they want to feather there own next a little more before he is booted out of office.
Obama, 2006–The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
For once he was right.
if the debt ceiling isnt increased, unemployment could hit 25 to 50%, the dollar would be crushed thus oil and all commodities would go through the rough. gas could hit 10 to 20$ or higher. your money market funds would be valued below $1 so everyone who has money in a money market wold immediately lose money. as a conservative, i think whoever plays chicken with the debt ceiling, should be voted out of office without a doubt.
They need to raise the debt cieling so that they can give more money to Pakistan and increase the war on drugs, if they work hard they can have 20 million Americans Incarcerated within a year, and they can invent another enemy like Bin Laden to blow the money on. Its a shame that we have such morons running our country into the ground. Crying Shame, our grandchildren will struggle to undo the mess these criminals have made.
No option to issue an executive order? If August 2nd comes without a raised debt ceiling, there will be big problems. There needs to be a Plan B.
Greece and Ireland hasn't even defaulted on their obligations yet and look how bad their credit rating has gone. If we actually default the Dollar is going to be in a free fall. Those who think the danger of not raising Debt Celing is "Scare Tactics" I really question if they have brain cells. If U.S. defaults on our loans it is going to ruin whatever recovery we have had in the last 2-3 years or worse.
As for those who believe Democrats are against cuts are you guys reading the same news we are reading? The budget whitehouse purposed is ALREADY cut compare to before. What the disagreement on is on what to cut.
The Republicans wants to cut medicare, social security, education, etc and keep the tax cut for the wealthy and the Corporations. The Democrats wants to cut not as much and balance it via letting the tax cuts for the wealthy expire.
Keep in mind the Republican's idea of cutting corporate tax comes a week after GM announced they are paying no tax this year.
Troubles me to see how sad it is the average person knows nothing about fundamental economics. CUTTING SPENDING IS NOT ENOUGH NOR WILL IT EVER BE ENOUGH. Taxes, unfortunately, MUST BE RAISED AS WELL. It is not an issue about being liberal or conservative, but of common sense and simple math.
Of course the republicans are the ones who are using scare taitics. Remember during the Bush administration most of the republicans who are refusing to do so now raised Bush's debt ceiling NINE TIMES. But they know that if they don't raise it , this will cause a reversal of the small dent this administration is making in the mess Bush and these republicans made. They are so determined to try to STEAL the white house again they would go further toward ruining this country and killing more of it's people for their own rush to steal power and to give the tax money to corporations. It would be so wonderful for their actions to affect only republicans in this country. If their actions caused misery to the republicans only, if they didn't have money for food, for doctors for rent and every thing the bush administration caused us, I would rejoice to high heaven.
It takes a lot of gall for the Republicans to talk about "fear tactics"! Their mantra during the Bush years was "911" – especially when they wanted to throw our rights out the window or torture the enemy. What about the "government coming to get granny" crap as they tried to block end of life counseling for the elderly. The Republicans wrote the book on fear tactics.
I love how people compare thier "personal" financial situtation to the U.S governments.....You people do realize our economy is GLOBAL....is you personal financial situation global?? Funny people we've become......
at this point I hope they don't raise it, all those rich money hoarders get theirs, and the economy collapses and we go back to the green back and we all get a chance to rebuild our way.
Oh..and perhaps you should know. Republicans since Reagan all have increasing both debt and deficits in common. The GOP as we know it today have no credibility in their platform of fiscal responsibility. Just thought the average American should be enlightened.
The DEMS have already agreed to cut on the spending side, while the REPUBS have taken the revenue side off the table. No one can be serious about deficit reduction without both spending and revenue changes. I think the wealthy, whose interests the Republicans are trying to protect, will long for the day when they could have seen the debt limit raised
– since the catastrophic events that will follow from not raising it will far exceed any taxes they might have had to pay to gain a fair compromise.