Jim Nussle, who served in the Bush White House and for eight terms in Congress, said Tuesday on CNBC that brinksmanship over the debt ceiling could damage the economy, regardless of the eventual outcome.
“There will be repercussions that our economy right now doesn’t need, doesn’t deserve, at a time when it’s just trying to get back on its feet,” he said. “We’re really at a positive tipping point where you could get back to growth, you could get back to creating jobs, you could get back to economic development.”
Congress must pass a federal budget by Sept. 30 or the government will shut down. The U.S. Treasury is set to bump up against its $16.7 trillion borrowing limit sometime in mid-October unless lawmakers raise the debt ceiling.
Moody’s said it expects legislators to act before both deadlines pass, but it predicted negative consequences if Congress fails to approve either.
“A failure to raise the federal debt limit would have greater adverse financial market and economic consequences than a government shutdown because market participants would perceive an increased probability of sovereign default,” the investor service said in a report.
Moody’s said the perception that the U.S. government could default on its debt if the ceiling isn’t raised “could roil financial markets and damage business and consumer confidence.”
Republicans have linked both issues to efforts to defund President Barack Obama’s signature health care legislation, the Affordable Care Act, which begins going into effect next month.
House Republicans passed a bill to fund the federal government but strip Obamacare of its funding, but the Senate is expected to remove the health care law provision.
Watch video, uploaded to YouTube on Tuesday, below:
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