GO
Loading...

Enter multiple symbols separated by commas

US Default Should Be ‘Unthinkable’: Larry Summers

Lawrence 'Larry' Summers
Andrew Harrer | Bloomberg via Getty Images
Lawrence 'Larry' Summers

It should be inconceivable for the United States to default on its debt , Larry Summers told CNBC on Tuesday, stressing that the country's creditworthiness must not be held hostage by budgetary wrangling.

"It should be unthinkable to default on debt in the United States… after 200 years the thought that the full faith in credit of the U.S could be called into question is unthinkable," Laurence Summers, former treasury secretary, said.

Summers said the 2008 financial crisis offered a lesson in what happens when base safe assets are put at risk, and said the country should "never experiment" as it did back then.

"Everybody should be for meeting the debt obligations of the U.S. and then there needs to be a very vigorous an active discussion around what is a very real problem; the sustainability over the long term of the U.S.financial position which surely needs to be addressed in a balanced way with both measures on the expenditure side and measures on the revenue side,"Summers said.


(Read more: Market Rally Totally Misplaced; Scary February Ahead: Strategist)

At the end of February, the U.S. government will reach its debt limit and an agreement is needed between Republicans and Democrats for an increase to the debt ceiling. It is expected that both sides will face similar acrimonious discussions to those that preceded an eleventh hour deal to avert the "fiscal cliff" in the New Year.


(Read more: Key Points in Bill Passed by Congress to Avert US 'Fiscal Cliff')

He added that it was "inappropriate and not credible" to hold the country's creditworthiness hostage to discussions about the debt ceiling.

"I'm confident that the president regards an absolutely critical priority for him as bequeathing to his successor four years from now a nation that is in a sustainable financial position. And that's obviously going to require addressing both spending and addressing revenues…and that he is going to do that," he said.

By CNBC's Shai Ahmed; Follow her on Twitter @shaicncb

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • The California property that once served as Michael Jackson's home and personal fantasyland is being listed at $100 million.

  • Lottery ticket

    A thief who broke into the car of a Seattle couple left behind a million-dollar lottery ticket, NBC News reports.

  • The Lamborghini SpA Urus SUV.

    There's no shortage of luxury vehicle choices, but increasingly the wealthy are opting for high-end SUVs instead of traditional models.

U.S. Video

  • Q1 GDP (revised) down 0.7%

    CNBC's Rick Santelli breaks down the latest data on U.S. economic growth. And CNBC's Steve Liesman provides perspective.

  • Attack of the 'zom-bee' wasps... check it out!

    Scientists have discovered a "dementor" wasp that injects venom into cockroach prey rendering it unable to direct its own body and serves as live food for the wasp later on. Take a look, but it's not for the faint of heart.

  • ASCO targets war on cancer

    CNBC's Meg Tirrell, provides a preview of this weekend's meeting of the American Society of Clinical Oncology and which big pharma companies investors need to watch come Monday.