Importance Of Increasing Debt Ceiling Stressed By Ben Bernanke

Importance Of Increasing Debt Ceiling Stressed By Ben Bernanke

Ben Bernanke, the chairman of the Federal Reserve stressed the importance of increasing the borrowing limit of the nation as Republican lawmakers are considering maintaining the debt ceiling.

According to Ben Bernanke, increasing the debt limit will allow the country to pay current bills. The statement reiterated the statement of President Barack Obama against the current stance of the lawmakers. Increasing the debt ceiling will not result to new deficits and it will not result to additional spending, Bernanke said at a University of Michigan event.

Bernanke indicated that it was important for Congressional action to increase the debt ceiling.

Bernanke pointed out the difference between increasing the debt limit and giving authority to new spending by the government. He also equated the threat of shutting the government down to compel a reduction in spending to a family not paying credit card bills because they are trying to save money. The strategy is ineffective.

President Obama had earlier indicated that the Republicans should increase the debt ceiling. He said that a compromise may be made. However, the country should not go through another debate on how current debts will be paid by the government. He added that it will be irresponsible for America not to pay its bills.

A number of economists have indicated that if the United States will not pay its bills it may cause the economy to go back into recession and a possible credit downgrade.

Timothy Geithner, the Treasury Secretary, informed leaders in Congress that the $16.4 trillion debt ceiling of the United States may be maxed out by the middle of February, which is earlier than what was initially expected. This highlighted the need to increase the debt ceiling as soon as possible.

Posted by James Fried on Tuesday January 15 2013, 2:24 PM EST. Ref: MSNBC. Link. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0