Obama cancels Asia trip, warns effects of shutdown could worsen

[applegrove]

Obama cancels Asia trip, warns effects of shutdown could worsen

by Paul Koring at the Globe and Mail (Canada)

http://www.theglobeandmail.com/news/world/us-shutdown-will-get-worse-obama-warns/article14695976/?utm_medium=Newsletter&utm_source=The%20Globe%20and%20Mail&utm_type=text&utm_content=TheGlobeandMail&utm_campaign=108560841

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With the government shut down and the debt-ceiling deadline looming – now less than two weeks away – the Obama administration is ramping up the pressure on Republican Speaker John Boehner.

“In the event that a debt-limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth,” the Treasury Department warned as it released a strongly worded report about the macroeconomic impact of failing to raise the $16.7-trillion debt limit.

“Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”

Raising the debt limit – routinely done more than 40 times times since Ronald Reagan was president – has become a new point of partisan brinksmanship since Republicans first threatened to put the United States into default in a fight over taxes last year.


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