Goolsbee Calls GOP’s Debt Limit Threat ‘Insanity’

Posted January 2, 2011 at 9:53am

Updated: 1:06 p.m.

President Barack Obama’s top economic adviser said Sunday that Republicans are “playing chicken” with a threat to vote against raising the debt ceiling and warned that failing to increase it would be “catastrophic.”

Some tea-party-affiliated members of the new House Republican caucus have said they will not support the upcoming vote to increase the amount that the nation can borrow unless the administration outlines dramatic cuts in spending. Austan Goolsbee, chairman of Obama’s Council of Economic Advisers, said on ABC’s “This Week” that the debt ceiling “is not something to toy with.”

“It pains me that we would even be talking about this. This is not a game,” Goolsbee told fill-in host Jake Tapper when asked whether the president’s team has a contingency plan should the vote fail. “If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008.”

“I don’t see why anybody’s talking about playing chicken with the debt ceiling,” Goolsbee said. “That would be the first default in history caused purely by insanity. … There would be no reason for us to default, other than that would be some kind of game.”

Shortly before Goolsbee appeared on ABC, Rep.-elect Allen West told “Fox News Sunday” that he would not vote to raise the debt limit unless there were spending cuts or unless a balanced budget amendment passes Congress.

“It’s not going to be a blank check that comes from Allen West,” the Florida Republican said. “The only way that I would ever support raising the debt limit is if we also talk about budgetary controls on the federal government, capping the spending.” West said costly entitlement programs such as Social Security and Medicaid “cannot continue to run on autopilot. So I’m not just going to write a blank check as far as raising the debt limit without us also saying we’re going to do these things to make ourselves fiscally responsible.”

On CBS’ “Face the Nation,” two Republicans and two Democrats sparred over the debt ceiling, with no Members saying outright that they would vote to raise the limit.

Rep. Debbie Wasserman Schultz (D-Fla.) would not commit to supporting the vote, saying she would “wait and see” which policy proposals the GOP puts forth. Rep. Anthony Weiner (D-N.Y.) said Republicans are allowing “the full faith and credit of the American people to go down the tubes” if they don’t vote to increase the ceiling.

“Raising the debt ceiling to me is absolutely irresponsible,” Rep.-elect Mike Kelly (R-Pa.) said.

Rep. Michele Bachmann, who formed the Tea Party Caucus last spring, promoted a petition from her political supporters urging Members to vote against the debt ceiling increase. “Congress has had a big party the last two years. They couldn’t spend enough money,” the Minnesota Republican said. But Bachmann added that she does not want the government to shut down. “That’s why I think it’s important for the Democrats who are so willing to spend money to now be a part of trying to figure out how we can be responsible,” she said.

Bachmann accused the Democrats of trying to twist the issue into making it seem like the GOP wants to shut down government. “That is not what we’re looking to do, and you’re stating it falsely. We are not [looking] to shut the government down. No one benefits,” she said. “But at the same time, we’re not looking at wanting to continually raise the debt ceiling. That’s something that the Democrats want to do.”

Weiner fired back: “I don’t know what you call it, Michele, but that’s shutting down the government.”

Goolsbee said lawmakers “shouldn’t even be discussing that. People will get the wrong idea. The United States is not in danger of default.”

Goolsbee said the budget that Obama will propose this year will make “a series of tough choices, and the president’s not afraid to do that.” He would not say whether Obama supports some of the Republicans’ announced plans to place a hard cap on new discretionary spending or return government spending to pre-stimulus levels. But the adviser said Obama is “open” to ideas from either party to grow the economy.

Tricia Miller contributed to this report.