Advisor to Reagan, Bush, and Obama agrees with Campaign for Liberty: failure to raise debt ceiling does not mean default
In an e-mail to his Harvard colleague Dr. Greg Mankiw, Dr. Martin Feldstein, former top economic advisor to Ronald Reagan, member of President George W. Bush’s Foreign Intelligence Advisory Board, and member of President Obama’s Economic Recovery Board, dismisses the fear of a “default” if Congress does not raise the debt ceiling:
The WSJ and FT continue to write about the risk of default, quoting the Treasury, Boehner and others.There really is no need for a default on the debt even if the debt ceiling is not raised later this month. The US government collects enough in taxes each month to finance the interest on the debt, etc. The government may not be able to separate all accounts into “pay” and “no pay” groups but it can certainly identify the interest payments. An inability to borrow would have serious economic consequences if it lasted for any sustained period but it would not have to threaten our credit standing.
Campaign for Liberty continues to oppose raising the debt ceiling.