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JOHNSON OPENING STATEMENT ON THE IMPACT OF A DEFAULT ON FINANCIAL STABILITY AND ECONOMIC GROWTH

October 10, 2013

WASHINGTON – Today, Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson (D-SD) held a hearing titled “Impact of a Default on Financial Stability and Economic Growth.”
 
Below is Chairman Johnson’s statement as prepared for delivery:
 
“Good morning, I call this hearing to order.
 
“This Committee has many important issues to consider, and plenty of challenges our constituents want us to solve together on a bipartisan basis.  However, we find ourselves on Day 10 of a government shutdown that is costing taxpayers money.  In addition, the shutdown drags down our economic recovery with each passing day.  This unnecessary shutdown does nothing to address our long-term fiscal challenges, and is certainly not promoting job creation in the short-term.
 
“If that were not bad enough, we have only one week left before we reach our nation’s debt limit.  If Congress does not act soon, the United States will fail to pay its bills in full and on time by choice for the first time in history.  I do not favor making the United States into a deadbeat nation, which would be the consequence if we do not raise the debt ceiling.  While we must work to address our long-term fiscal issues, a default on our debt will not reduce our deficit.  And there is little to nothing Congress could do after the fact to repair the damage that would be felt for generations.
 
“It is important to remember the mere threat of default can have significant costs.  During the last major debate on the debt limit in 2011, the uncertainty and delays in raising the debt ceiling cost taxpayers about $1.3 billion for that fiscal year, according to G-A-O.  Over a ten-year window, the taxpayer cost could be as high as $18.9 billion. 
So today, before it is too late, we will hear from our witnesses about the kind of impacts we should expect if the United States defaults.  We will hear what this could mean not only for the financial system, but also for American families’ ability to pay their bills, small businesses’ ability to create jobs, and current, as well as future, retirees’ ability to protect their life-savings.
 
“It is time to stop playing this foolish game of chicken with our economic recovery, and it is time for Congress to focus on addressing the real problems our constituents sent us to Washington to solve.  To do that, we must first raise the debt limit.
 
“With that, I recognize Ranking Member Crapo for his opening statement.”
 
   
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