President Obama’s top economic adviser today suggested that negotiating with Republicans over an increase to the nation’s debt limit could be more harmful to the U.S. economy than default itself.
“If you sanction through negotiation the legitimacy of somebody threatening default, then that is going to happen over and over again,” National Economic Council director Gene Sperling told ABC’s Jonathan Karl at a Politico Playbook breakfast this morning.
“So sanctioning negotiations with someone threatening default is not going to end the risk of default; it’s likely to increase the chances that we as a country eventually default. The only way for us to go forward is to all make clear the era of threatening default is over,” he added.
The comment reflects a White House that’s digging in even more deeply rather than moving toward any concessions to House Republicans, increasing the prospect of the nation’s first-ever default just 10 days from now. House Speaker John Boehner took an equally hard line Sunday, saying the lack of negotiations has put the country on an unmistakable “path” to default.
Obama’s refusal to negotiate on the debt limit comes in spite of an alarming forecast last week from his own Treasury Department that concluded a default “has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse.”
Obama has previously negotiated with Republicans over an increase to the debt limit, as recently as 2011. But Sperling said today that doing so again would only encourage more brinkmanship in the future.
“It’s important that this be a high principle,” Sperling said of a refusal to negotiate. “If you sanction it, you just increase the chances that it will happen on a regular basis.”
Administration officials have said, however, that they would not oppose a temporary, short-term extension to the debt limit if that’s what congressional leadership decides to do.
“I think longer is better for economic certainty and jobs,” Sperling said, “but it is ultimately up to them.”