Reid: Default Would Be A Plague That Haunts Our Nation For Years To Come
July 18, 2011
Washington, D.C. – Nevada Senator Harry Reid made the following remarks today on the Senate floor regarding Senate Democrats’ meeting last week with Treasury Secretary Tim Geithner. Below are his remarks as prepared for delivery:
Senate Democrats sat down with Treasury Secretary Tim Geithner, and he painted a picture of what our world will look like if Republicans in Congress force this nation for the first time in its history to default on its financial obligations.
The picture was grim. This is how he described the state of our government if Congress allows this unprecedented default: “lights out.”
He said default would result in a complete “loss of capacity to function as a government.”
Even those who believe government should be small enough to drown in a bathtub have to admit that a total shutdown of even the most basic and essential functions of government is scary.
It wouldn’t be good for the American people. And it certainly wouldn’t be good for our economy.
The Senate has no more important task than making sure the United States continues to pay our bills for pre-existing obligations like Social Security.
To ensure that we meet this responsibility, the Senate will stay in session every day – including Saturdays and Sundays – until Congress passes legislation that prevents the United States from defaulting on our obligations.
Geithner described how the 80 million checks cut by the Treasury every day could simply stop coming. The federal government would, in effect, go dark.
Paychecks for troops in Afghanistan and Iraq and bases around the world could stop. FAA towers could shut down. So could the FBI and the CIA. Border crossings could close. Safety inspections of the food Americans eat and the cargo that enters our ports could halt. Literally every function of government could cease.
There would be no discussion of which operations and personnel were essential. All the payments would likely stop.
Some have said we could prioritize which bills to pay. Even if that wouldn’t irreparably damage the nation’s credit and our reputation in the global community – which it would – it is also a complete fiction.
Our government won’t even be able to cover the bills due on August 3. It will simply run out of money. And because we’ll be in default and our credit rating trashed, we won’t be able to borrow the money to keep running even if we wanted to.
That’s the picture Secretary Geithner painted. Like I said, it’s grim.
Many of my Republican colleagues understand this fact. They know what is at stake.
But the irresponsible Republicans who say default would not be an unmitigated disaster for this country either don’t know what they’re talking about, or are twisting the truth for political gain.
Americans have gotten this message. Seventy-one percent of them disapprove of the way Republicans have used this crisis to force an ideological agenda. Even a majority of Republicans disapprove of their unreasonable refusal to compromise, which puts our entire nation at risk
Those who say this crisis would be a blip on the radar are wrong. Default would be a plague that would haunt our nation for years to come. Our credit rating would take years to rebuild. The country would never be the same.
Some will say this is an exaggeration, but it is not. This is what Treasury Secretary Geithner told us. And it’s what business leaders, economists, rating agencies and bankers have all told us as well.
If this country defaults on its obligations, Geithner said, it will be “much worse than the Great Depression.”
And it would make the massive financial crisis of 2008 look mild.
“It will make what we just went through look like a quaint little crisis,” Geithner said.
That “quaint little crisis” led to the loss of almost 5 million American jobs. It caused our banking system to nearly collapse. More than $34 trillion in wealth was destroyed in less than two years. The ripples were felt throughout this nation and around the world.
The average American family lost $100,000 on its home and stock portfolio alone. And 400,000 families were plunged into poverty.
That crisis was minor, Geithner said, compared to the potential fallout from a U.S. default.
The leading business and economic voices of our time have said it again and again: the risks of default are unthinkable. It would be a catastrophe.
Secretary Geithner also said we’re running out of time to avoid this iceberg. The rating agencies have already placed our AAA credit rating under review, and could downgrade us at any moment.
This is what Treasury Secretary Tim Geithner said: “The eyes of the country are on us. The eyes of the world are on us, and we need to make sure we stand together and send a definitive signal that we’re going to take the steps necessary to avoid default.”
I ask, what will it take to get my Republican colleagues to wake up to the fact that they are playing a game of political chicken with the entire global economy? They must wake up soon.