The debt ceiling debate refuses to end.
There have been so many plans now you could stich them together and make a patchwork quilt. We are seven days and counting until Uncle Sam becomes a dead beat dad. The fear of default is weighing on the minds of investors, American citizens and Congressional members.
But will both parties be able to meet half way and compromise? I got the perspective from Senator Chris Coons (D-Delaware), member of the Budget Committee on this policy showdown.
LL: You map out Uncle Sam's checking account if you will, what are the consquences of default?
Sen. Coons: Well, this has never happened before, so it's hard to say for sure what will happen. But it's safe to say we can expect four areas of impact — governmental, financial, personal, and global. If the government isn't able to borrow to meet its obligations, Treasury would theoretically be faced with brutal choices about what to pay and what not to pay. Do we pay for Social Security but shut down the FBI?
Do we pay for Medicare but stop food inspections? The impacts would touch every American. The dollar is already weakening and the market tension is palpable. Economists are predicting job losses of more than 600,000 if we default, and it's going to be harder than ever for small businesses to access the capital they need to grow.
Increased interest rates on mortgages, student loans, car loans and credit cards will hit nearly every American. If we default, we will have communicated to the world in no uncertain terms that the United States is no longer the safest investment of its money. That's a stunningly reckless risk for the Republicans' to be taking with this.
LL: Not all Republicans are in unision when it comes to just paying what we can and ignoring the rest. I have spoken with many who say they are trying to educate the Tea Party members on the danger of a default. Are you worried a deal will not be reached?
Sen. Coons: I am worried, yes. Very. But I know the President, Leader Reid and Leader Pelosi are committed to reaching a deal that will avert the full onset of this crisis. For the last month or so, I and I know many of my Democratic colleagues have been reaching out to business owners and CEOs to urge them to speak up — to reach out to their Republican contacts and urge them to take this seriously.
Many of the Tea Party Republicans elected last fall had never served in government before now and, I think, have failed in their responsibility to place the needs of the country ahead of their own personal priorities. It's reckless. To their credit, more than a dozen Senate Republicans have voiced support for the 'gang of six' proposal, which calls for a more balanced approach to long-term deficit reduction. But House Republicans' dogmatic opposition to making our tax system more equitable is irresponsible.
LL: Why were you against "Cut, Cap, Balance"?
Sen. Coons: 'Cut, Cap and Balance' was a dangerous, ideological plan that would have done more harm to the country than good. Putting mechanisms in place to ensure future savings is not a bad idea, but 'Cut, Cap, and Balance' was a terribly irresponsible way of trying to implement that idea. I'm glad we've moved on from it.
LL: Do you think a balanced budget amendment is needed to help steer Congress back on the fiscal path?
Senator Coons: As county executive, I balanced the budget for six years. A legally required balanced budget isn't in itself a bad idea:
but it's not realistic to think that we could implement it in just a matter of days or weeks. It would take years to bring our budget back into balance.
LL: President Obama said neither party is blameless on this spending crisis. Do you agree?
Senator Coons: The President is right. It took Congresses and Presidents of both parties years to create the situation we're in now, so it's frustrating to see Republicans pretend they have no responsibility for the staggering increase in debt over the last 10 years. Both parties are responsible and both parties must be responsible for getting us out. Both parties must share in the sacrifice.
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
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