Senate Democrats Push Dire Specter of Default Message

Jul 14, 2011 1:26pm

ABC News' Sunlen Miller (@SunlenMiller) reports:

With the August 2 debt deadline looming, and the negotiators seemingly at a constant impasse, Senate Democrats today honed in on a message of what a default on the nation’s debt would really mean to Americans, pointing a finger at some Republicans in the House and Senate who are still threatening to force the nation to default on the debt.

“This idea that not paying the debt doesn’t matter,” Senator Chuck Schumer, D-N.Y., said today at a press conference,  “is patently false, dangerous and callous.”

Describing the situation as “dire” as the “specter of default on our debt is growing greater each day,” Senator Schumer said. “A default would pull the rug out of each and every family in this country for no good reason.”

Schumer said that while Republicans call a default “no big deal” it would actually mean that the Treasury Department would have to make some “dark and difficult choices” which would cause families to bear the burden.

“These choices that would require us week in and week out, the Treasury Department to pick winners and losers to decide which bills we wouldn’t pay to avoid default strike me as nearly catastrophic,” Senator Coons, D-Del., said, “And for those who suggest casually on the floor of the Senate that we could engage in this process without real consequences for the week in and week out lives of working families across this country, that is simply ignoring reality.”

After August 2, if the negotiators fail to raise the debt limit, projected revenue for the rest of the month would be $172 billion, and projected obligations at $307 billion.

Schumer laid out what it would look like as choices are made – and how the negative effects would ripple into American communities. For example, if Social Security, Medicare, troops and interest on the debt were all paid there would be a lot left that would go unfunded.

“We don’t have a dime for student loans in August….we don’t have money for the FBI. We don’t have money for cancer research, IRS refunds, border patrol.  There would be none of that,” Schumer said, “You don’t have anyone at the border, anyone doing food inspections, anyone in the FAA towers. America would come to a grinding halt.”

Gas will be higher, the cost of a home will be more expensive, utilities will go up, food will be more expensive the Democratic Senators warned today.

Senator Coons said that he is “concerned” about “how late it is.”

“The very thought that there are members of this body, public leaders, there’s candidates for president and party leaders who are out in public saying that defaulting on America’s mortgage is something we should seriously consider, is a responsible alternative, strikes me as outrageous and irresponsible.”

Asked about the White House negotiations which have all but stalled, Schumer said that it is their hope that the negotiations will continue to go forward.

“The president still wants a large, large amount of deficit reduction and debt reduction. And he still is working towards that,” Schumer said again pointing a finger at Cantor, “he is basically standing in the way and it’s a shame, it’s a shame.”

Schumer then outlined their choice preference if the negotiators cannot get that large agreement.

“We would like to see if we can’t get a grand deal that some real cuts be added to Senator McConnell’s proposal. And perhaps Senator McConnell’s proposal be modified.”

Senators Reid and McConnell are working on this approach together which would build on McConnell’s proposal and add at least $1.5 trillion in spending cuts that were first agreed upon in the talks led by Vice President Biden. To get the votes, this strategy would in essence bypass House Republicans who have said they will not vote to raise the debt ceiling under any circumstances.  

“It can’t just be Eric Cantor deciding. If Eric Cantor decides everything, I fear we will be in default,” Schumer said.

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