Oct 10 - With the U.S. economy and our nation’s honor at stake, our leaders must do what it takes to raise the debt ceiling, American Bankers Association President and CEO Frank Keating said in testimony before the Senate Committee on Banking, Housing and Urban Affairs.
Keating emphasized the importance of our country meeting its obligations and not creating any uncertainty about whether we will do so “on time, every time.”
“In this country, our word is our bond,” Keating said. “The respect and admiration that the United States and its institutions inspire around the world are based on the certainty that when our nation makes a promise, we keep it.”
Keating testified that ordinary Americans would bear the brunt of the damage if the United State defaults for the first time in history. The Bipartisan Policy Center, of which Keating is a board member, estimated that the mere prospect of approaching the debt limit in 2011 cost taxpayers nearly $20 billion as nervous investors demanded higher interest on U.S. Treasury Bonds to account for the risk of default. But an actual default would have much more dire consequences, Keating testified.
“If our nation defaults on its nearly $17 trillion in debt, the harm is likely to be measured in hundreds of billions of dollars,” Keating said. “Even the slightest uptick in Treasury rates would cascade through the economy. It would raise the cost for taxpayers to service our country’s debt and would raise the cost of borrowing for businesses, meaning job losses and price increases.”
Keating, who balanced his state’s budget during each of his eight years as Oklahoma governor, believes it’s critical we get our nation’s fiscal house in order, but that we must avoid harming ourselves in the process.
“No one takes our national debt more seriously than I do,” Keating said. “Rather than inflict damage upon ourselves by failing to pay our existing obligations, we should instead focus on reducing our future spending and bringing our debt to a sustainable path.”
For a copy of Keating’s full testimony, please click here.