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Tuesday
Apr052011

Geithner: Raise Debt Ceiling or Risk Another Financial Crisis

Lauren Victoria Burke/ABC NEWS(WASHINGTON) -- In testimony Tuesday before a Senate Appropriations panel, U.S. Treasury Secretary Timothy Geithner again emphasized to Congress that failure to raise the country’s debt limit would have “catastrophic” consequences and make the recent financial crisis appear “modest in comparison.”

“Default by the United States would precipitate a crisis worse than the one we just went through. I think it would make the crisis we went through look modest in comparison. It would force us of course to cut critical payments to our seniors and it would be a reckless, irresponsible act to this country. I find it inconceivable that the Congress would not act to increase the limit.”

The Treasury boss then said that if lawmakers do not raise the debt ceiling, it could cause a number of “inconceivable” consequences, such as a dramatic rise in unemployment.

“It would be catastrophic. I mean, if you call into question the willingness of the government of the United States to meet its obligations, you will shake the basic foundation of the entire global financial system. It is inconceivable that America would do that. And of course I am totally confident that Congress will act to avoid that,” Geithner said.

“It will raise dramatically the borrowing costs permanently for all Americans. Every business for a very long period time would face a much higher cost of borrowing. Every family would face a much higher cost of borrowing. Unemployment would rise dramatically. Thousands if not hundreds of thousands of businesses would fail. And of course you would shake the confidence of the world in U.S. financial assets and Treasuries. It would be a deeply irresponsible act, again inconceivable.”

Copyright 2011 ABC News Radio

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