Refusal to up debt ceiling 'catastrophic': Obama aide
A top Obama economic advisor warned Sunday it would be "insanity" if Congress fails to raise the US debt ceiling, and cause America to default on its obligations for the first time in its history.
"This is not a game. You know, the debt ceiling is not something to toy with," Austan Goolsbee, chairman of President Barack Obama's council of economic advisors, told ABC's "This Week" program.
The United States is about 400 billion dollars away from hitting the current debt ceiling of 14.3 trillion dollars. But fiscal conservatives in Congress are opposed to raising the limit, believing it is already high enough.
Refusing to raise the ceiling would be "essentially defaulting on our obligations, which is totally unprecedented in American history," Goolsbee said.
"The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008."
Republicans, who take control of the House of Representatives when it returns on Wednesday, have vowed to rein in government spending, and some are threatening to make an issue of the debt ceiling.
"Raising the debt ceiling to me is absolutely irresponsible. We've been spending money for so long that we don't have and keep saying, well, it's OK; we'll just raise taxes; we'll find it somewhere," incoming Representative Mike Kelly, told CBS's "Face the Nation."
But Goolsbee cautioned against Republican intransigence.
"If we get to the point where you've damaged the full faith and credit of the United States, that would be the first default in history caused purely by insanity," he argued.
"I mean, that would there would be no reason for us to default, other than that would be some kind of game."
Just before going on vacation, US Congress approved a temporary spending bill that will fund the federal government for another 10 weeks through March 4 in order to avoid a government shutdown.
In 1995, Republicans alarmed by the huge US debt forced a days-long government shutdown during which non-essential government workers were placed on furlough and non-essential services were suspended.
The shutdown was triggered by a standoff between then president Bill Clinton, who refused to make certain budget cuts, and the Republican-controlled Congress, which threatened to refuse to raise the US debt limit.
Republican Representative Michele Bachmann added on ABC: "Republicans do not want to shut down the government, but do not want to raise the debt ceiling."