Chairman of the Federal Reserve Ben Bernake speaks during a press briefing at the Federal Reserve 11, 2012 in Washington, DC. Bernake spoke to the press after meeting with the Federal Reserve's Federal Open Market Committee. (Credit: AFP/Getty Images)
Federal Reserve Chairman Ben Bernanke and outgoing Treasury Secretary Timothy Geithner on Monday urged Congress to increase the nation's debt limit, warning that a failure to do so could be catastrophic.
Bernanke took it a step further and even argued in favor of abolishing the debt limit altogether.
“I think it would be a good thing if we didn’t have [the debt ceiling],” Bernanke said during his presentation at the University of Michigan. “I don’t think that’s going to happen. I think it’s going to be around.”
Bernanke’s remarks were made during a broader discussion on different ways U.S. lawmakers can act to avoid a possible default. One student asked the Fed chairman whether he thinks the debt ceiling has any “practical value.”
“No, it doesn’t really have — it’s got symbolic value, I guess, but . . . no other countries in the world have this particular institution,” he answered.
“If the Congress is approving spending and it’s approving taxing, and those two things are not equal,” Bernanke continued, “the way to address it is by having a sensible plan for spending and a sensible plan for revenue and make decisions about how big the government should be or how small it should be.”
Meanwhile, a few states over, Geithner in a letter addressed to House Speaker John Boehner (R-Ohio) urged House leadership to -- you guessed it -- agree to an increase in the debt limit.
In this Nov. 30, 2012, photo provided by CBS News Treasury Secretary Timothy Geithner. Credit: AP
“It is important to point out that extending borrowing authority does not increase government spending; it simply allows the Treasury to pay for expenditures Congress has previously approved,” Geithner writes. “Failure to meet those obligations would cause irreparable harm to the American economy and to the livelihoods of all Americans.”
“Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom,” he adds. “I respectfully urge Congress to meet its responsibility to the country by extending normal borrowing authority well before the risk of default becomes imminent.”
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