"Some economists have said that it could be worse than the day Lehman Brothers went under," warned one Democratic Congressional Insider who saw an impending catastrophe. "And the long-term ramifications of defaulting on our debts will likely be irreversible in the global market." Another echoed, "The jolt in our country and throughout the world will be horrible."
And even Democrats who weren't quite as alarmed over the immediate fallout from failing to raise the debt ceiling worried that the costs to the economy would quickly escalate. One Democratic Member said the consequences of failing to raise the debt ceiling in early August would be "major, for a few weeks, then catastrophic." Another who predicted major consequences said they would become "catastrophic if the 'major' economic consequences don't scare Members into moving quickly to fix the problem."
Some Republican Members concurred that they were courting a catastrophe if they didn't meet the early August deadline. "Only a fool would believe that doing something that hasn't happened in 235 years--default on our obligations--won't shake the world," said one GOP Congressional Insider. "We are the largest economy and the most credit worthy government on the planet. What we do or fail to do matters."
Other Republicans were a bit more circumspect. One Republican Congressional Insider who said there would be "major" consequences explained, "I say this because Wall Street and the markets tend to overreact to everything. I think the market takes a huge one day nose dive, just like the first TARP vote that failed." Another said, "It will be bad, but raising taxes and killing jobs or ignoring our spending problem would be bad too."
And while nearly a third of the Republican Congressional Insiders downplayed concerns over not meeting the August deadline, even some of them were still nervous. "If the deal is inked but not passed yet, the market barely ripples," said one GOP Member who predicted "minor" consequences. But the Insider added, "If the White House and the GOP are still 100 miles apart, they could be 'major.'"
The National Journal Congressional Insiders Poll is a regular anonymous survey of Democratic and Republican members of Congress.
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