Top economic advisers say Obama won't negotiate under threat of debt default

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Top economic advisers say Obama won't negotiate under threat of debt default

(Xinhua) 08:28, October 08, 2013

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WASHINGTON, Oct. 7 -- Senior White House officials said on Monday that President Barack Obama won't negotiate with the Republicans under the threat of a debt default and reiterated it is the duty of Congress to raise the debt limit.

"The President has made clear that the era of threatening default has to be over," said Gene Sperling, Director of the National Economic Council, at an event held in Washington, D.C..

Sperling said Obama believes if he were to engage in talks with the GOP lawmakers over debt limit, it would set a bad precedent for future negotiations.

"If you sanction through negotiation the legitimacy of somebody threatening default, then that is going to happen over and over again," he said, arguing that some Republican factions are using the threat of default to extract policy from the White House.

Without a deal to lift the debt ceiling by Oct. 17, the United States would face a potential default on its debt. Its consequences, as the Treasury Department warned, would be " catastrophic." Meanwhile, the partial government shutdown, which began on Oct. 1, headed to the second week with both parties entrenched in their positions, making it increasingly likely the debt ceiling fight will be coupled with the debate over how to reopen the government.

Obama has called on Congress to pass no-strings-attached bills to end government shutdown and raise the debt ceiling. House Republicans have insisted on changes or delays to the President's signature healthcare law, the Obamacare, in exchange for funding the government. House Speaker John Boehner vowed Sunday that he would not bring up bills to fully reopen the government or raise the debt ceiling unless Obama and Democrats come to the negotiation table.

Jason Furman, Chairman of the Council of Economic Advisers, also said at the event that Congress passing a bill to authorize government borrowing is the "only path forward" for the country.

"You'll have days, not weeks, until you deplete that money and you default," Furman said of the Oct. 17 debt limit deadline and the roughly 30 billion dollars the Treasury would then have on hands, playing down the possibility that Obama would unilaterally raise the statutory borrowing limit of the federal government.

Dismissing the GOP proposal of directing the Treasury to pay bondholders and Social Security recipients first in case of a default, Sperling said prioritization is not about avoiding default but about managing default. "Prioritization is default by another name."

"The fear is that once the United States fails to pay its bills, not only can it have a very negative effect on the economy... but most people believe that for years and years to come we will pay higher interest rates" because the U.S. credit is no longer " impeccable," he added.

（Editor：LiangJun、Yao Chun）