Washington (CNN) –- Now, with only a week to go before the Treasury Department’s August 2 deadline for raising the debt limit, I must confess I am getting increasingly gloomy. I’m very worried no deal will be reached between President Obama and the Republican and Democratic leadership in Congress.
There may be some serious backroom talks going on to achieve an agreement. I certainly hope there are. But all I see in public is a lot of political posturing. If there’s no deal, there will be default, and the consequences will be awful for all of us.
With the deadline looming, cooler heads may yet prevail and some compromise formula might yet emerge. Indeed, until recently, I simply assumed that would happen. But it hasn’t happened yet, and there’s not much time left. Until now, I could not imagine the United States of America being unable to pay its bills.
Unfortunately, I can now imagine that happening, and it’s not pretty at all.
If there’s no deal, I could see a severe drop in the stock markets, a decline in the value of the dollar, higher interest rates and inflation. All of that could push the U.S. economy into another Great Recession. I hope I am wrong and those economists who say the country can in fact absorb the pain of no increase in the nation’s debt ceiling are right. But it’s a huge risk that we shouldn’t need to take.
When White House officials say there might be “economic calamity” for the country if there’s no deal, they might be right.
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