White House Warns Of Dire Default Consequences

The New York Times reports:

As the high-wire negotiations with the Congressional leadership resume Thursday over raising the nation’s debt ceiling, one message from President Obama and his top aides has remained consistent: The consequences of default would be very, very scary.

Mr. Obama’s tone toward his Republican adversaries has shifted over the weeks; last week he wagged his finger, while this week he seemed optimistic and hopeful about a deal. But Mr. Obama has not wavered in his use of surprisingly stark language to describe what would happen if the United States defaulted on its financial obligations.

During his otherwise news-free Twitter town hall on Wednesday, the president sketched the doomsday scenario that would snowball from a breakdown in the negotiations and a failure to raise the nation’s debt ceiling. “Then the Treasury will run out of money,” he said. “Potentially the entire world capital markets could decide, you know what, the full faith and credit of the United States doesn’t mean anything.  And so our credit could be downgraded, interest rates could go drastically up, and it could cause a whole new spiral into a second recession, or worse.”

Mr. Obama usually resists the use of heated rhetoric. But even as administration officials have searched for what Mr. Obama calls a “balanced approach,” they have sought to convince Americans that failing to reach a deal will affect them directly — and in a big and very bad way.