A police officer walks down the West Front steps of the US Capitol in Washington yesterday as the shutdown entered its seventh day.
WASHINGTON: The “terrible” and “unthinkable” threat of a US government default transfixed Washington yesterday, as a standoff over raising the debt ceiling surmounted angst over a week-long government shutdown.
Republican House Speaker John Boehner sparked alarm after warning on Sunday that he would not allow Congress to raise the government’s borrowing limit by an October 17 deadline unless President Barack Obama climbs down and offers concessions.
The sense of building crisis over Washington’s financial paralysis was picked up in China, with Beijing warning that the United States must act quickly to establish the credibility of the dollar, the world’s major reserve currency. Concern also spread to previously calm investors, with the Dow Jones Industrial Average down 89.72 points (0.60 percent) at 14,982.86, mirroring a downward trend on global markets sparked by anxiety over US government paralysis.
The White House reacted sharply to Boehner’s remarks, warning Congress could trigger a disastrous default and shred Washington’s prized credit rating, as doomsday scenarios of default, once deemed unthinkable, appeared to grow in credibility.
“We can’t threaten an economic catastrophe,” Obama said yesterday, decrying Republicans for using the debt ceiling as leverage.
“What we’re not willing to do is to create a permanent pattern in which unless you get your way, the government is shut down or America defaults,” Obama said during a visit to the Federal Emergency Management Agency.
“That’s not how we do business in this country. And we’re not going to start now.”
The US government will be barred from borrowing by October 17 unless the current $16.7 trillion debt ceiling is lifted.
In the resultant chaos, Washington would begin defaulting on its debts, global stock markets could plummet and the fragile world economy could take a hit it can ill afford.
Gene Sperling, Director of the National Economic Council, said Boehner’s comments were disappointing and warned Obama could not allow the House of Representatives to hold him hostage over raising the debt limit because it would set a dire precedent for future presidents. AFP
