Remember when?: Past statements linking not passing a debt ceiling increase to a default

The claimed impacts below are eerily similar to what is being said in the current debt ceiling increase debate. From the Los Angeles Times:

Rubin Urges Congress to Raise Debt Ceiling; Budget: Default is 'unthinkable,' Treasury secretary says. But he warns that even the appearance of that risk would roil the markets.
Los Angeles Times - Los Angeles, Calif.
Date: Sep 8, 1995
Treasury Secretary Robert E. Rubin, warning that even the appearance that the government will default on its debts would roil the financial markets and cause severe economic problems, urged Congress on Tuesday to act now to extend the debt limit.

If the government were to default on its debts, Rubin said, short-term ramifications would be substantial and "it would change the cost of funding of the federal government for years and years and years to come because it would attach a question mark that never existed before with respect to the federal debt. I don't think that will happen."

Approximately 160 Republican House members and two Democratic House members signed letters to Clinton and Senate and House leaders vowing to oppose raising the debt limit unless Clinton goes along with their budget-balancing proposal. Tony Blankley, spokesman for House Speaker Newt Gingrich (R-Ga.), said that Gingrich read the letter "with great interest" but does not want a crisis over the debt ceiling to arise and does not believe it will unless Clinton causes it. . . .

From the Washington Post:

Wall Street Fears Debt Ceiling Fight Could Shake Financial Markets
[FINAL Edition]
The Washington Post - Washington, D.C.
Author: Clay Chandler
Date: Sep 15, 1995
Start Page: F.01
Text Word Count: 1575
Wall Street is beginning to worry about the possibility of the federal government defaulting on interest payments to bondholders and other financial obligations if President Clinton and congressional Republicans fail to reach agreement on next year's budget.

Failure to raise the debt limit before mid-November, bond market and budget analysts warn, could disrupt government bond auctions, force Treasury Secretary Robert E. Rubin to juggle federal finances to avert a default and -- by undermining investor confidence in the creditworthiness of U.S. bonds -- send the government's borrowing costs soaring.

A standoff on the debt ceiling "could precipitate a true federal financial crisis" in which the government is forced to "default on its obligations and delay payment to anyone expecting a check from Washington," warned Stanley Collender, director for federal budget policy at Price Waterhouse & Co., the New York accounting firm, in a recent report to clients. . . .

From the Los Angeles Times:

[FINAL Edition]
Sun Sentinel - Fort Lauderdale
Author: Los Angeles Times
Date: Sep 18, 1995
Start Page: 3.A
Text Word Count: 503
Abstract (Document Summary)
Republican budget hawks are vowing that, if President Clinton does not agree to their deep spending cuts, they will block a scheduled increase in the federal debt ceiling - a move that could theoretically force the government into default.

In response, the Clinton administration is warning Congress that even talking about such a move risks a fiscal "disaster," including panic in world financial markets and soaring interest rates at home. And the administration promises to fix the blame for any such debacle squarely on the Republicans. . . .

From the Washington Post:

Rubin Warns of Danger In Not Lifting Debt Limit
[FINAL Edition]
The Washington Post (pre-1997 Fulltext) - Washington, D.C.
Author: John M. Berry
Date: Sep 20, 1995
Start Page: C.01
Text Word Count: 634
Treasury Secretary Robert E. Rubin yesterday warned congressional leaders that a failure to raise the government's debt ceiling by early November could lead to a default that "could cause profound damage to our country."

But two of the Republican recipients, House Budget Committee Chairman John R. Kasich of Ohio and Ways and Means Committee Chairman Bill Archer of Texas, said they would back a debt ceiling increase only if President Clinton agrees to their plan to balance the federal budget within seven years, which would mean cuts in major entitlement programs such as Medicare. . . .

From the Washington Post:

Greenspan Urges GOP to Drop Debt Threat
[FINAL Edition]
The Washington Post (pre-1997 Fulltext) - Washington, D.C.
Author: John M. Berry; Clay Chandler
Date: Sep 23, 1995
Start Page: D.01
Text Word Count: 728
Federal Reserve Chairman Alan Greenspan yesterday urged congressional Republicans to drop their threat to allow a default on the government's nearly $4.9 trillion debt if President Clinton doesn't go along with their plan to balance the federal budget in seven years.

"The issue of default should not be on the table," Greenspan told the Senate Banking Committee. "To default for the first time in the history of this nation is not something anyone should take in any tranquil manner."

A default could occur sometime in November if action is not taken to lift the government's $4.9 trillion debt limit. If the Treasury could not borrow more money to pay its bills, it could default on $25 billion in interest payments due tens of thousands of individuals, businesses, financial institutions, pension funds and mutual funds that own Treasury securities. . . .

From the Washington Times:

U.S. default looms over budget bill
The unthinkable becomes tempting
September 25, 1995

The idea that the United States would ever fail to pay interest on the national debt used to be unthinkable. No more.

Looking for leverage to force President Clinton to come to terms on their plan to balance the budget in seven years, congressional Republicans are threatening to provoke the nation's first-ever default on its Treasury obligations - notes, bills and bonds held by millions of people all over the world. . . .

From the Los Angeles Times:

U.S. Will Hit Its Debt Ceiling on Halloween, Rubin Estimates

Los Angeles Times (pre-1997 Fulltext) - Los Angeles, Calif.
Date: Oct 14, 1995
Start Page: 23
Section: PART-A; National Desk
Text Word Count: 219

A Treasury official who spoke on condition of anonymity said [Robert E.] Rubin had not pinpointed the date before, saying instead that borrowing authority would be exhausted at the end of October. Others have said the first real risk of a government default could occur Nov. 15, when the Treasury is due to make a $25-billion interest payment on the debt. . . .

From Reuters:

Published on October 26, 1995.
President Clinton accused Republicans Wednesday of "economic blackmail" for tying the national debt ceiling to the budget controversy.
He swore he would not give in, even at the risk of default.
At the same time, the president boasted that the federal government had chopped its deficit to $164 billion - the lowest since 1989 - under his policies and portrayed his approach as the more reasonable way to eventually balance the budget. . .

From the New York Times:

For the Debate On Debt Limit, No Usual Script
Published: October 26, 1995

. . . The bad news for Mr. Rubin is that he is already caught, politically if not financially, at the center of what has become a giant game of chicken in which both the White House and the Congressional leadership blame the other for pushing the country to the brink of default. And he is playing with two equally unpredictable opponents, Congress and the markets.

On Capitol Hill, the freshman class of Republicans have called the shots on this issue so far, using tactics President Clinton today characterized as "economic blackmail, pure and simple." On Wall Street wary traders are wondering whether the risk of lending money to the Government may be about to rise sharply. . . .

From the Boston Globe:

Default seen as too awful to come true
[City Edition]
Boston Globe - Boston, Mass.
Author: Charles Stein, Globe Staff
Date: Oct 27, 1995
Start Page: 1
Text Word Count: 705
Abstract (Document Summary)
That's a question some have begun to ponder since Wednesday, when President Clinton said he would let the country default on its obligations rather than submit to "economic blackmail" by the Republican Congress. Republicans have refused to let the government borrow more money as a way of pressuring Clinton to approve their tax and budget plans.

Should the government actually fail to make its next payment to bondholders on Nov. 15, the impact could be severe, according to economists and money managers. "There would be absolute chaos in the financial system," said Eugene Sherman, director of research at M.A. Schapiro, a New York investment firm.

Sherman predicted that a default -- the first in US history -- would cause interest rates to rise in this country and around the world, with the bad news quickly spilling over into the stock market. Even after the crisis passed, the government would have to pay higher rates because investors would have lost confidence in the United States. "The damage would be lasting," said Stephen Roach, chief economist for Morgan Stanley. . . .

From the Chicago Tribune:

Chicago Tribune (pre-1997 Fulltext) - Chicago, Ill.
Author: Martin A. Regalia. Martin A. Regalia, chief economist at the U.S. Chamber of Commerce, has served with the Federal Reserve Board of Governors and the Congressional Budget Office.
Date: Nov 1, 1995
Sometime between now and Nov. 15 several sizable payments seem destined to push the government past its present debt ceiling of $4.9 trillion dollars, and into default. . . .

There were claims that the Federal government would go into default on the second day of the budget shutdown, but of course nothing happened. From the Washington Times:

November 2, 1995, The Washington Times
Stand fast, financiers urge GOP
Budget win worth default, four say

Four Wall Street financiers yesterday urged Republicans to stick to their plan to balance the budget even if it takes a first-ever default on Treasury securities to force President Clinton to sign it.

A default could occur on Nov. 15, when a $25 billion payment on the $4.9 trillion national debt comes due, if Republicans have not passed a planned temporary increase in the Treasury's debt limit to permit additional borrowing to pay the government's bills through Dec. . . .

From the Austin American-Statesman:

Federal shutdown could cost each American $160
Date: November 11, 1995 Publication: Austin American-Statesman Page Number: E7 ${ Word Count: 823
Citizen anger is appropriate. Because the U.S. government is threatened with closure on Tuesday -- although the Treasury almost certainly won't default on its bonds -- the game of chicken the White House and Congress are playing over the federal budget could end up costing taxpayers $40 billion.
That's $160 more in taxes for every American, the penalty the United States may have to pay in added interest if its credit rating is damaged by temporary default on . . .

From the Los Angeles Times:

Default Scenario Looms Larger as Budget War Rages; Treasury: Idea that the government would not be able to pay its debts is no longer 'unthinkable.' 'The bus is near the edge of the cliff,' one official warns.
[Home Edition]
Los Angeles Times (pre-1997 Fulltext) - Los Angeles, Calif.
Date: Nov 9, 1995
Start Page: 26
Section: PART-A; National Desk
Text Word Count: 948

Yet the risk that the U.S. Treasury will be unable to pay its debts in the near future has crept at least into the realm of possibility, as Congress and the White House engage in a high-stakes budget duel that so far has defied solution.

"The bus is near the edge of the cliff--and what this is doing is taking away the brakes," a senior Treasury Department official lamented Wednesday, referring to a House plan to make it much harder to operate under the government's credit limit of $4.9 trillion.

Further inflaming matters, House Republicans are trying to attach strings to a bill to increase the debt ceiling. One proposal, for example, includes in the debt-ceiling legislation a provision abolishing the Commerce Department, which the White House opposes deeply. . . .

From the Philadelphia Inquirer:

Philadelphia Inquirer - November 14, 1995 - A22 EDITORIAL

For weeks, the administration had implored Congress to avoid default by raising the debt limit above $4.9 trillion. . . .

From the New York Times several days into the first shutdown:

BATTLE OVER THE BUDGET: THE TREASURY;Treasury Secretary Takes a Risk to Sidestep an Even Bigger One: U.S. Default
Published: November 16, 1995

When Treasury Secretary Robert E. Rubin started plotting the Administration strategy for sidestepping the national debt limit, one priority was uppermost in his mind: extracting President Clinton from the pincer created by Republicans in Congress, who were trying to force a choice between adopting the Republican agenda and risking national default. . . .

The markets, meanwhile, have largely ignored the squabble; in fact, interest rates have declined since July, when Mr. Rubin first wrote a letter to Congressional leaders warning of dire consequences if the debt ceiling is not raised. . . .

Other news headlines:
At the brink
The specter of default worries investors . . .
Published on 1995-11-10, Page B1, The Kansas City Star

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