News / USA

US Central Bank Chief: Debt Ceiling Must be Raised

Federal Reserve Chairman Ben Bernanke (file photo)
Federal Reserve Chairman Ben Bernanke (file photo)
Michael Bowman

The chairman of the U.S. central bank says economic and fiscal ruin would result from a failure by Congress to raise the limit on the federal government's ability to borrow money and service America's national debt.

For years, Federal Reserve Chairman Ben Bernanke has warned of the dangers of failing to confront fiscal challenges and meet fiscal responsibilities. Perhaps his most-pointed comments to date came Tuesday in describing the perils of delay in raising the federal debt limit, which could cause the U.S. government to default on its obligations to lenders.

“Even a short suspension of payments on principal or interest on the Treasury’s debt obligations would cause severe disruptions in financial markets, induce ratings downgrades of U.S. government debt, create fundamental doubts about the credit worthiness of the United States, and damage the special role of the [U.S.] dollar and of Treasury securities in global markets," said Bernanke. "Interest rates would likely rise, slowing the recovery and, perversely, worsening the deficit problem.”

Bernanke spoke at a Washington conference on America’s debt crisis sponsored by the bipartisan public policy group, the Committee for a Responsible Federal Budget. The Federal Reserve chairman admitted that no one relishes the idea of allowing the U.S. government to borrow additional money when the national debt already exceeds $14 trillion. But he noted that additional funds are needed to cover fiscal commitments already made by Republican and Democratically-controlled Congresses and administrations alike.

The United States is bumping up against the current federal borrowing limit of $14.2 trillion. President Barack Obama and Democrats on Capitol Hill have urged a prompt raising of the debt ceiling as a painful but necessary step. But many Republican legislators are either accusing Democrats of hyping the potential dangers of default, or insisting that federal spending be cut as a condition for a debt ceiling vote.

Also appearing at the debt conference was House Budget Committee Chairman Paul Ryan, who portrayed the issue as one of the few tools available to Republicans to pressure what he sees as spendthrift Democrats in the Senate and the White House.

“Unfortunately, our partners in the Senate have chosen not to do a budget," said Ryan. "We [House Republicans] have put our plan out there, but the budget process is done. And that is why the debt limit is the only other train in the station left to get any kind of fiscal controls out of Congress, and that is why you have these talks revolving around the debt limit.”

Many participants at the debt conference stressed that both political parties bear responsibility for America’s fiscal woes. Democratic Senator Mark Warner of Virginia said he cannot believe that anyone of either party would even consider allowing the United States to default on its debt obligations.

“I do not know what economic bible they look at when the United States defaults, that somehow that could be a good proposition. When right now the market has already priced the chance of our default as higher than the chance of Mexico, the Philippines, Panama," said Warner. "They are better credit risks than the United States government? Everything else that we talk about in Washington pales in comparison to this issue.”

Warner is part of a bipartisan group of senators working to bridge differences on trimming the federal deficit and reducing the country’s debt burden. Another member of the group, Republican Senator Mike Crapo of Idaho, noted that raising the debt ceiling is but the first step of a longer march to fiscal sanity.

“I do believe we will get to a deal on the debt ceiling at some point, and it will not be pretty when it happens," said Crapo. "But when it is over, we will still have a debt crisis in America. And we will still need to be putting together a major paradigm shift in America to help us get onto a right path.”

In general, Democrats favor modest spending restraint and higher federal taxes on the wealthy to improve America’s fiscal balance. Republicans reject tax hikes and insist on deep spending cuts, along with transforming programs that provide income and medical coverage for retirees. Many economists believe both lower government spending and higher tax revenues will be needed to bridge the nation’s budget gap and, ultimately, trim the national debt. But a bipartisan formula for doing so remains elusive.

In the meantime, America skates closer to a potential debt default with each passing day.

You May Like

HRW: Egypt's Trial of Morsi ‘Badly Flawed’

Human Rights Watch says former Egypt leader's detention without charge for more than three weeks after his removal from office violated Egyptian law; government rejects criticism More

Photogallery Lancet Report Calls for Major Investment in Surgery

In its report published by The Lancet, panel of experts says people are dying from conditions easily treated in the operating room such as hernia, appendicitis, obstructed labor, and serious fractures More

Music Industry Under Sway of Digital Revolution

Millions of people in every corner of the Earth now can enjoy a vast variety and quantity of music in a way that has never before been possible More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Study: Insecticide Damaging Wild Bee Populationsi
X
April 24, 2015 10:13 PM
A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video TIME Magazine Honors Activists, Pioneers Seen as Influential

TIME Magazine has released its list of celebrities, leaders and activists, whom it deems the world’s “most influential” in 2015. VOA's Ramon Taylor reports from New York.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Armenia and Politics of Word 'Genocide'

A century ago this April, hundreds of thousands of Armenians of the Turkish Ottoman empire were deported and massacred, and their culture erased from their traditional lands. While broadly accepted by the U.N. and at least 20 countries as “genocide”, the United States and Turkey have resisted using that word to describe the atrocities that stretched from 1915 to 1923. But Armenians have never forgotten.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.

VOA Blogs