Nobel Laureate and retired MIT Professor of Economics Dr. Robert Solow said today on a media conference call that if the debt limit is not raised, “[This] would be a terrible blow to the leadership of the US in the world economy, a nation that when it speaks is listened to. This is not a trivial matter.” He added that “[i]t’s really important to get the debt limit raised without idle threats, certainly without real threats, and without cuts in spending at a time when cuts in spending are the wrong thing to do.
Alan Blinder, Professor of Economics and Public Affairs at Princeton, former Vice Chairman of the Federal Reserve System’s Board of Governors, former Member of Council of Economic Advisers stated that “this should not be controversial, and it’s not difficult.” He added that “maintaining the full faith and credit of the United States government should not be controversial should not be partisan and that’s why this letter urges a clean increase in the debt ceiling without attaching a lot of stuff to it.’ He asserted that “If we actually bump into the debt ceiling and in a worst case start defaulting on the debt, this is going to be a big shock to the financial system on a par, in terms of shock value, maybe beyond with the Lehman Brothers’ bankruptcy in September 2008.” He concluded, "Whatever comes out of negotiations, even if it should be exactly the Ryan plan to one extreme … would require a very large increase in the national debt ceiling. It doesn’t matter if Democrat or a Republican or neither or both, any kind of sensible budget agreement for the future you would envision for the future requires raising the debt ceiling.”
Lawrence Mishel, President of the Economic Policy Institute, said that “Both the Obama and the Ryan budget increase the debt by roughly 6 trillion or more over the next 10 years so who can stand there and say ceiling doesn’t have to be raised?
To listen to the press call in its entirety, click here.
To read a transcript of the call, click here.
To read the letter, signed by 248 economists and 6 Nobel Laureates, click here.