Sunday, September 15, 2013
White House Warns Against Threats of Debt Default
WASHINGTON — Five years ago, the investment bank Lehman Brothers declared bankruptcy. The credit markets seized. The unemployment rate soared. Small and large financial institutions shook, and some fell, as the economy plunged into the deepest recession since the Great Depression.
On Sunday, the Obama administration celebrated its successes in combating the recession, while acknowledging the difficulties that remain: while the corporate economy has rebounded strongly, the middle class and its aspirants continue to feel the squeeze of high unemployment and sluggish wage growth.
The White House warned this weekend that Congressional recalcitrance on raising the federal debt ceiling might hurt the economy at a still-fragile time, with Gene B. Sperling, the director of the National Economic Council, warning in a call with reporters about the “unnecessary threatening of default” this fall.
“Thanks to the grit and resilience of the American people, we’ve cleared away the rubble from the financial crisis and begun to lay a new foundation for stronger, more durable economic growth,” a White House report said.
“The last thing we can afford right now is a decision from Congress to throw our economy back into crisis by refusing to pay our country’s bills or shutting down the government,” it said.
Mr. Sperling, the chief White House economic adviser, said that the negotiations over the debt ceiling in 2011 proved harmful to the economy — with some business leaders ranking them “with Pearl Harbor or 9/11” in terms of their hit to consumer confidence.
The economy remains weak as the Obama administration and Congressional Republicans prepare themselves for another round of bruising budget talks.
The unemployment rate has fallen to 7.3 percent. But a smaller proportion of Americans are working or looking for work than at any time in the last 35 years. And millions of wage-earning families have become poorer over the past decade, judging by wage growth and inflation.
The short-term measure financing the government will run out at the end of September, raising the risk of a government shutdown. The Obama administration anticipates running out of room under its statutory debt ceiling around mid-October, meaning that Congress might have to authorize the printing of new debt or deal with the unprecedented consequences of a default.