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."
Who do we owe this debt to? Ourselves?
Quit buying all that military war equipment. Bring troops home. Mothball the NAVY. Close all those bases overseas. We don't need those bases to defend the mainland USA. Get rid of the tax breaks for big oil and the multi nationals that send jobs overseas. Raise taxes to the Reagan rates.
Raising the debt ceiling just puts off the real problem. They need to raise taxes and cut spending. Crazy idea: let's take in at least as much money as we spend. Earth-shattering, I know, to delusional politicians who are too cowardly to be "the one that cut defense spending" or "the one that taxed the rich." Hey, I know, even crazier idea, let's adjust revenue and spending to approximate what they were in the 90s when we had a budget surplus. It's not like we have no idea how to do it.
Not raising the debt limit is illegal. It is against the 14th Amendment of the U.S. Constitution that the Republicans claim to hold so dear to their hearts. If they took the time to actual read and understand it, they would see that section 4 of the 14th Amendment REQUIRES that the debt ceiling be lifted ("The validity of the public debt of the United States, authorized by law . . . shall not be questioned").
To those who want to raise the debt limit: What part of spending money we don't have do you not understand?
Do you not understand that 40%, yes 40% of what the Federal gov't. is spending is borrowed money? Even worse, do you not understand that most of that borrowed money is money created out of thin air by the Fed. Reserve because no one else will loan us money at the current low interest rate at which the Fed. Reserve will? In short – do you not understand that our system is usustainable because it is not viable? You can raise the debt limit all you want but the unavoidable consequece is permanent inflation and destruction of your purchasing ability, keeping in mind that wealth and money are NOT the same thing. Raising and raising and raising to the Nth is actually the most destructive path available.
Im tired of all this grandstanding. The only way to not have to raise the debt ceiling is to balance the budget tomorrow. No Repbulican has proposed a balanced budget, much less tomorrow. So they are using the debt ceiling as political leverage. They are courting world economic disaster to force a political policy they cant achieve by negotiation or consensus. Who are the terrorists now?
Oh Yah We have a plan B
TAX SPEND, TAX SPEND, SPEND AND TAX Some More...
Let me get this straight: A Republican is accusing a non-Republican of using "scare tactics"? Talk about the pot calling the kettle. . . . . .
Look in a mirror before you open your mouth, Toomey.
haven't they raised the debt ceiling like 100 times? I love republicans caqlling for america to just simply go bankrupt. Apparently they don't know what happens when you lose your credit worthiness.
Well actually it's OUR credit worthiness. Once again we are being held hostage by the republicans.
I promise you...when the elections come round again. The letter hijacking the united states until they got their tax cut renewal will circulate..it will circulate on every network I have access to.
They DO NOT CARE ABOUT YOU!
About the middle of July, everyone with money in the stock market better exit or you will wish you had. I wonder how many rich people are going to sell the market short?
We should standardize our green energy usage, market exchange of oil powered vihicles to electric or algae fuel powered cars, less usage of oil and cutting of oil imports. This will save us billions of dollars every month on oil imports
Obama voted AGAINST raising the debt ceiling when he was a Senator and Bush was President. why can't Repub Senators return the favor???
It is time to reengage the State Governments roll in the functionality of the Federal Government. Repeal the 17th Amendment to the Constitution. Read Federalist Papers 62 and 63.
they raise it again and again, until like a nuclear reactor they it reaches point of no return to where they have to raise it monthly then weekly then hourly, and then we'll explode into an infinite loop of debt raisage (is that a word?) until we reach more zero's then there are stars in all the galaxies in the universe.....
It’s simple…the GOP will raise the debt ceiling……..IF the DEMS agree to cut spending. Why won’t they agree to that
–>Because those spending cuts are all smoke and mirrors and have nothing to do with deficit reduction. The GOP is looking for cuts in discretionary spending that are a tiny part of the budget and deficit and will hurt real people who need support – meanwhile, the GOP refuses to talk about other spending that makes up a very large part of the budget (military spending and waste, for example) or raising taxes on those who can afford it. Its really a dog and pony GOP show and will not accomplish any deficit reduction at all. The truth is we could not afford the Bush tax cuts or the unfunded medicare prescription plan passed by the GOP but true to form, they blame others for their mistakes.
This is not scare tactics by the Democrats. We all have good reason to be scared if the debt ceiling is not raised. In truth, the Republican's threat not to raise the debt ceiling is blackmail, pure and simple. I hope the American people fully understand the Republican game and assign blame to them for trying to dismantle Medicare and other programs that are vital to the health and welfare of middle class people in this country.
How about cutting off the billions of dollars given in foreign aid to countries that don't seem to be on our side after all as a start... that might help. Why blame it on spending geared towards domestic issues when gazillions are being funneled to foreign "allies" and wars of dubious value?
If anyone would know something about "scare tactics", it would be the Republicans. For sure! Remember the "death panel"?
All i can say, this is high time for ALL AMERICANS to stop dividing as dems and Reps and stand united to drive out all crsis facing this GREAT NATION and go from SURVIVE to THRIVE and LEAD. America has done it before, I am confident she will do it again, but only with unity not division.
Why is America letting the repugs hold our country hostage? If the dems give in (again, like they did last fall on the tax cuts), they should just quit taking a pay check, go home, and give the government to the repugs.
Do the idiots who want to not raise the debt ceiling understand that our country already owes this money, much of it due to obligations previous to this administration? Surely the repug politicians know this. Or is any failure of America under Pres. Obama seen as a good thing?
If this was to keeping on going the federal government would've have another government shutdown, like what we had 1 or 2 months ago where President Barack Obama and Congress had to come out with a $33 billion budget and it increased into $38 billion. I hope this doesn't happen again.
the liberals in washington don't know how to spend responsibly.
Sell the White House.
LET IT ALL HAPPEN!!!!
no more welfare. shut it off. welfare reform now. Welfare should be a safety net, not a way of life.
@ Jeremiah – they won't agree to it for the same reason the GOP wouldn't allow themselves to be blackmailed EVERY TIME they raised the debt ceiling. This is not something to monkey with!