ABA President/CEO Frank Keating warned Congress about the dangers of not raising the debt limit but urged lawmakers to address entitlement spending, a major driver of the nation's long-term debt.
"According to the Congressional Budget Office, by the year 2043 entitlement programs and debt service payments alone are projected to outstrip revenues. This means that there will be no funds at all for any discretionary spending. It is impossible to address the long-term sustainability of our debt without addressing the growing costs associated with our entitlement programs," Keating said in testimony at a Senate Banking Committee hearing on Thursday.
"The CBO predicts that in the next 25 years our debt will surpass 100% of our GDP. This would put us in the same league as the fiscally unstable countries that led Europe into crisis. Already, the U.S. debt amounts to nearly $54,000 per person, and $148,000 per taxpayer. The interest payments alone on our debt will cost over $8,000 per U.S. citizen in 2013," Keating added.
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The former Oklahoma Republican governor also told the committee that the U.S. would lose the world's trust if it failed to raise the debt ceiling by the Oct. 17 deadline.
"Since May, the Treasury has used extraordinary measures to keep us from hitting the debt limit. We have been lucky to avoid it thus far, but time is up. With the U.S. economy and our nation's honor on the brink, our leaders must — in the spirit of patriotic compromise — do what it takes to make a deal," he said.
"If confidence is lost in our country's willingness to pay its bills on time, we will have lost something that may be impossible to regain — the world's trust."
NAFCU President/CEO Dan Berger also called on Congress to raise the debt limit in a letter to the Senate Banking Committee on Thursday.
"As evidenced by the still struggling housing market, the country's economic recovery remains extremely fragile. Failure to address the debt ceiling would threaten growth and recovery, deter investor confidence in the United States, and breed uncertainty on a global scale," Berger said in the letter to Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho).
"Financial institutions of all sizes, including credit unions, need to have certainty and stability in order to meet the credit needs of consumers across the country," he also wrote.
House Speaker John Boehner said Thursday he would offer a temporary increase to the debt limit.
"What we want to do is to offer the president today the ability to move – a temporary increase in the debt ceiling, an agreement to go to conference on the budget – for his willingness to sit down and discuss with us a way forward to reopen the government and to start to deal with America's pressing problems," Boehner said on Capitol Hill.
"Listen, it's time for leadership. It's time for these negotiations and this conversation to begin. And I would hope that the president will look at this as an opportunity and a good-faith effort on our part to move halfway – halfway to what he's demanded – in order to have these conversations begin," he added.
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