Debt Default Will Be Catastrophic for Business, Says Treasury Report
Debt default will disrupt markets and damage private-sector confidence and growth, the Department of Treasury said in an Oct. 3 report released to the public. The report corroborates some testimony delivered to the Senate Budget Committee on Sept. 24 (see…
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13092501). The Federal Reserve is expected to default by Oct. 17, should Congress fail to pass legislation raising the debt limit. “In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth -- with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the report said. Congressional Democrats dismissed gestures to tie the debt ceiling debate with current efforts to push appropriations legislation required to re-open the federal government (see 13100316).