White House officials are hoping the nation’s economic recovery doesn’t get floored by the ceiling.
The Obama administration amped up the rhetoric as the United States officially hit the legal limit on its national debt yesterday, with negotiations over raising the ceiling seemingly at a standstill.
“We need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious, indeed,” said White House spokesman Jay Carney yesterday. “And those who suggest otherwise are whistling past the graveyard.”
Carney’s words echoed the sentiment of Treasury Secretary Timothy Geithner, who has recently been pushing members of Congress to swiftly pass legislation that would raise the debt limit, currently set at $14.294 trillion, and prevent the government from defaulting on its loans.
“A default would inflict catastrophic, far-reaching damage on our Nation’s economy, significantly reducing growth, and increasing unemployment,” Geithner wrote in a open letter to the Senate. “This would be an unprecedented event in American history.”
But economists sought to tamp down the sense of imminent danger.
“We are not in the least bit of a state of crisis,” says Brian Riedl, an economist with the conservative-leaning Heritage Foundation. “As long as Treasury has enough tools in the toolbox to finance the government for the next two or three months, then we have no crisis.”
Geithner has said that the government can continue functioning until Aug. 2, thanks to a series of accounting tricks including borrowing funds from a federal pension program.
Riedl said that all of these accounting tricks are normal and would have to be reversed once the debt ceiling is raised, “but long-term effects we’re talking about are zero.”
The debt ceiling has been raised by Congress at regular intervals for decades now, but recently the procedure has grown more acrimonious as lawmakers pursued significant fiscal reforms and sought to impose limits on the government’s ability to spend at will.
A few weeks ago, Speaker of the House John Boehner, R-Ohio, set the stage for a drawn out battle over the debt, saying that he would only support a hike in the limit if it came with budget cuts of equal or greater sums — which would mean trillions of dollars.
“We all know what the problems are. Why don’t we just deal with them? No more kicking the can down the road,” Boehner said over the weekend. “Now is the time to deal with the fiscal problems we have in an adult-like manner.”
For the past week, Vice President Joe Biden has been holding talks with Republican and Democratic legislators to bridge the gap between the two parties.
But the talks have produced little evidence of progress, and a report yesterday in the Wall Street Journal indicated that any agreement over the debt limit was a long way off.
Speaking Sunday on CBS’s Face the Nation, Boehner said of the talks, “I’m not seeing any real action.”
Opinion polls show wide disparities in the public’s take on the debt-ceiling, reflecting the complicated nature of the problem, experts said.
A Gallup poll from last week found that nearly half of all Americans did not want Congress to vote to raise the debt limit, compared with only 19 percent who supported the hike. Meanwhile, according to a new Politico poll, 56 percent of Americans say it would be “disastrous” to the economy if Congress does not raise the limit.
Economists agree that not meeting the nation’s debt obligations down the road would have significant ramifications.
“The key date is early August, or whenever Treasury actually runs out of money,” Riedl said, “because they won’t be able to just move money around anymore.”
The Obama administration amped up the rhetoric as the United States officially hit the legal limit on its national debt yesterday, with negotiations over raising the ceiling seemingly at a standstill.
“We need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious, indeed,” said White House spokesman Jay Carney yesterday. “And those who suggest otherwise are whistling past the graveyard.”
Carney’s words echoed the sentiment of Treasury Secretary Timothy Geithner, who has recently been pushing members of Congress to swiftly pass legislation that would raise the debt limit, currently set at $14.294 trillion, and prevent the government from defaulting on its loans.
“A default would inflict catastrophic, far-reaching damage on our Nation’s economy, significantly reducing growth, and increasing unemployment,” Geithner wrote in a open letter to the Senate. “This would be an unprecedented event in American history.”
But economists sought to tamp down the sense of imminent danger.
“We are not in the least bit of a state of crisis,” says Brian Riedl, an economist with the conservative-leaning Heritage Foundation. “As long as Treasury has enough tools in the toolbox to finance the government for the next two or three months, then we have no crisis.”
Geithner has said that the government can continue functioning until Aug. 2, thanks to a series of accounting tricks including borrowing funds from a federal pension program.
Riedl said that all of these accounting tricks are normal and would have to be reversed once the debt ceiling is raised, “but long-term effects we’re talking about are zero.”
The debt ceiling has been raised by Congress at regular intervals for decades now, but recently the procedure has grown more acrimonious as lawmakers pursued significant fiscal reforms and sought to impose limits on the government’s ability to spend at will.
A few weeks ago, Speaker of the House John Boehner, R-Ohio, set the stage for a drawn out battle over the debt, saying that he would only support a hike in the limit if it came with budget cuts of equal or greater sums — which would mean trillions of dollars.
“We all know what the problems are. Why don’t we just deal with them? No more kicking the can down the road,” Boehner said over the weekend. “Now is the time to deal with the fiscal problems we have in an adult-like manner.”
For the past week, Vice President Joe Biden has been holding talks with Republican and Democratic legislators to bridge the gap between the two parties.
But the talks have produced little evidence of progress, and a report yesterday in the Wall Street Journal indicated that any agreement over the debt limit was a long way off.
Speaking Sunday on CBS’s Face the Nation, Boehner said of the talks, “I’m not seeing any real action.”
Opinion polls show wide disparities in the public’s take on the debt-ceiling, reflecting the complicated nature of the problem, experts said.
A Gallup poll from last week found that nearly half of all Americans did not want Congress to vote to raise the debt limit, compared with only 19 percent who supported the hike. Meanwhile, according to a new Politico poll, 56 percent of Americans say it would be “disastrous” to the economy if Congress does not raise the limit.
Economists agree that not meeting the nation’s debt obligations down the road would have significant ramifications.
“The key date is early August, or whenever Treasury actually runs out of money,” Riedl said, “because they won’t be able to just move money around anymore.”
