“Canada urged its top trading partner, the United States, on Tuesday to steer clear of defaulting on its debt to avoid “disruptions” to the global economy.
“Finance Minister Jim Flaherty told reporters he had spoken with his U.S. counterparts in Congress and budget officials in the Obama administration to encourage them to “work something out.”
“This is not just a procedural matter. This has some consequences,” Flaherty told reporters when asked about the possibility of the U.S. missing a debt payment.”
The assumption in Washington is that Congress will vote to increase the debt limit — as long as it is accompanied by the large spending cuts Republicans are asking for.
Today, the chairman of the Federal Reserve, Ben Bernanke, said the debt limit was too important to be used as a bargaining chip over spending cuts.
Said Bernanke: “I urge the Congress and the Administration to work in good faith to quickly develop and implement a credible plan to achieve long-term sustainability. I hope, though, that such a plan can be achieved in the near term without resorting to brinkmanship or actions that would cast doubt on the creditworthiness of the United State.”
Meanwhile, the debt limit also came up in last night’s CNN Republican presidential debate. Below is what the GOP presidential hopefuls had to say about the debt limit:
VUGHN: John, thank you very much.
Governor Romney, I’d like to ask this to you first, please.
The Treasury Department says the United States will hit its credit limit on August the 2nd. Do you believe we will ultimately have to raise the debt ceiling?
ROMNEY: I believe we will not raise the debt ceiling unless the president finally, finally is willing to be a leader on issues that the American people care about. And the number one issue that relates to that debt ceiling is whether the government is going to keep on spending money they don’t have.
And the American people and Congress and every person elected in Washington has to understand we want to see a president finally lay out plans for reining in the excesses of government.
You’ve heard on here a whole series of ideas about entitlements. And that’s about 60 percent of federal spends. That’s a big piece. That’s a big chunk. Ideas from all these people up here.
Where are the president’s ideas?
Each person has different ideas here. We can try them and try different ideas in different states and different programs at the federal level.
But why isn’t the president leading? He isn’t leading on balancing our budget and he’s not leading on jobs. He’s failed the American people both in job creation and the scale the government.
VAUGHN: Governor –
ROMNEY: And that’s why he’s not going to be reelected.
VAUGHN: Governor, what happens if you don’t raise it? What happens then? Is it OK not to?
ROMNEY: Well, what happens if we continue to spend time and time again, year and year again more money than we take in?
What we say to America is: at some point, you hit a wall. At some point, people around the world say, “I’m not going to keep loaning money to America to pay these massive deficits pay for them because America can’t pay them back and the dollar is not worth anything anymore.” In that circumstance, we saddled our future — the future of our kids in a way that is just unacceptable.
And so, you’re going to see Republicans stand up and say, “Mr.
President, lay down plans to balance this budget.” If he does so, if we gets Democrats to come at that time table and honestly deal with the challenges we have, with the entitlement challenges, with the spending and discretionary accounts, with our jobs issues, and finally say you know what? We really can’t afford another trillion dollars of Obamacare.
ROMNEY: If he’ll be honest about these things, then I think you’ll see the kind of progress you’d hope to see.
KING: Congresswoman Bachmann, you’ll get a vote on this issue. What Governor Romney outlined is the goal of Republicans, who’s got a big deal to balance the budget. If you can’t get that on the short term and this date approaches, those negotiations are continuing, what is your price tag — what is your price tag in at least a first wave of cuts?
And if you don’t get it, would you say to the House Republicans, “No, let the government go into default, that’s where we need to stand”?
BACHMANN: I’ve already voted no on raising the debt ceiling in the past. And unless there are serious cuts, I can’t.
But I want — I want to speak to someone that’s far more eloquent than I. Someone who said just dealing with the issue of raising the debt ceiling is a failure of leadership. That person was then Senator Barack Obama. He refused to raise the debt ceiling because he said President Bush had failed in leadership.
Clearly, President Obama has failed in leadership. Under his watch, in two and a half years, we’ve increased the federal debt 35 percent just in that amount of time.
So, what we need to do both, from the Congress and president, he needs to direct his treasury secretary: pay the interest on the debt first, then we won’t have a failure of our full faith and credit from their prioritized spending. We have to have serious spending cuts.
On Twitter at luizachsavage