April 24 (Bloomberg) -- Raising the U.S. national debt ceiling shouldn’t be an issue in negotiations over the federal government budget, two former Treasury secretaries said.
Robert Rubin, Treasury secretary under Democratic President Bill Clinton, and Paul O’Neill, who held the post under Republican President George W. Bush, spoke in an interview on CNN’s “Fareed Zakaria GPS” scheduled to air today.
“The debt ceiling should never be part of the budget negotiations,” Rubin said, according to a program transcript. Asked if he agreed, O’Neill replied, “Absolutely.”
Congress is facing a vote as early as next month on raising the government’s $14.3 trillion legal debt limit. The Treasury Department projects that it will hit the cap on May 16, though it could use emergency measures to avoid default until about July 8.
U.S. President Barack Obama and members of his economic team have said that failure to approve an increase could have catastrophic consequences for the U.S. economy and financial markets.
Standard & Poor’s on April 18 revised the U.S. government’s long-term outlook to negative on concern the Obama administration and Congress will fail to reach agreement on cutting medium- and long-term debt.
“I think an impasse or serious threats with respect to default are highly irresponsible,” Rubin said. “And I think they can do great damage to confidence in our political system and also potentially to our markets. And the idea of default itself seems to me should be absolutely unthinkable.”
O’Neill agreed, saying, “I think people, even if they don’t understand the details of the numbers, have this gnawing concern that our society is headed for a cliff that we’re not going to be able to recover from.”
As part of the debate on government spending, which also includes completing a 2012 budget, Obama has offered the outlines of a plan to reduce the debt by $4 trillion over 12 years through a combination of spending cuts and tax increases.
House Budget Committee Chairman Paul Ryan, Republican of Wisconsin, has proposed cutting spending by $6 trillion over a decade in part by privatizing Medicare and capping Medicaid spending. Republicans reject Obama’s push for tax increases to help reduce debt.
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