Himes warns of debt default

U.S. Rep. Jim Himes, a Greenwich Democrat, spoke to the Greater Norwalk Chamber of Commerce Sept. 16 calling for Congress to reach a deal over deficit reduction strategies.

At the end of September the county faces a government shutdown unless Congress agrees to a debt ceiling resolution.

The Treasury Department said if no deal is reached, it won”™t have enough money to pay the government”™s bills by mid-October.

“We”™re not talking about the budget anymore,” Himes said, emphasizing the problem was larger than any single-year budget line item. “The debt ceiling does nothing to limit debt because (Congress) always raises it.

“But if we get to Oct. 19 or 20, and the world believes we won”™t honor our (debt) obligations, then we”™re in a place we”™ve never been before,” he said.

Himes, speaking to a group of about 100 people at the Norwalk Double Tree by Hilton Hotel, likened the situation to people deciding whether or not to pay off their credit cards after buying a big screen TV and as much clothing as they wanted. The purchasing and budgeting decisions have already been made. Now it”™s time to decide how to pay.

Though Himes offered few specifics on how to reduce the debt ceiling, he said the government will need to initiate “equitable reforms” of Medicare and Social Security and raise additional revenue through eliminating tax loopholes.

In light of recent discussions over military action in Syria, however, there has been less urgency to address debt reduction. Himes said he does not believe it would be “the worst thing” if Congress acts too slowly and there is a government shutdown. But he warned it could be disastrous if the nation stops paying its bills or if the world thinks there”™s a chance default could happen.

“A government shutdown isn”™t the worst thing,” Himes said.

But, he added, “When you start thinking about people working in Social Security and relying on Social Security, it becomes quickly uncomfortable.”

Himes said there is a “catastrophic downside” if national debt is mishandled. “Any business person knows it all starts with the premise that U.S. Treasury debt is risk free,” he said. “If we start raising questions about that, the economic impact will potentially be dramatic.”

Earlier this month House Republicans said they would agree to raise the nation”™s debt limit and avoid a government shutdown only if President Obama and Democrats agree to delay Affordable Care Act regulations. Other Republicans, such as Arizona Sen. John McCain, have urged the need to sign a short-term spending bill to avoid a government shutdown and the blame that goes along with it.

Himes said he believes it will be up to GOP House Speaker John Boehner “to say no to the radical elements of his party” to reach an agreement.

“The faster we get to that point the faster we”™ll strike a deal to get past the government shutdown,” he said.