Larry Summers on Debt Ceiling Impasse: 'Right Thing To Do Is To Move On With This'

Former Treasury Secretary Lawrence Summers reportedly said it’s not right to kidnap and hijack the financial credibility of the United States to make a point about deficit and fiscal policies.

"So the right thing to do is to move on with this. And look, the people who say we have got real fiscal issues in our country, they’re right. But just because you’ve got some issue with me and you are right about your issue, doesn’t mean you get to hold me hostage or kidnap one of my children," Summers told CNN explaining his stance on the debt ceiling impasse.

Also Read: Best Penny Stocks

The economist also believes that extending the debt ceiling stand-off and potentially defaulting on the national debt should not be an experiment that the U.S. should do.

"It could mean that we have people fighting in dangerous environments overseas who don’t get their pay on time and at a time when we have still got people in the military on food stamps — that’s got to be a serious thing. We have already seen the spread on U.S. bonds, the interest rate that the United States has to pay to borrow go up and that means higher taxes for all of us," he said.

Credit Rating: The former Treasury Secretary also pointed out that the U.S. still has a lower credit rating as a country because it came close to the debt limit and defaulted in the 2011 period. "We got downgraded, and we haven’t been upgraded since. The debt that the government issues right now, some of it has higher interest rate than it otherwise would," he noted.

In the latest development, Democrats in the House of Representatives plan to file a discharge petition as a means to raise the debt ceiling in case it becomes necessary, top House Democrat Hakeem Jeffries said, according to a Reuters report.

Apart from the economic crisis, Summers also spoke about the financial markets and pointed out that during the 2011 debt ceiling crisis, the stock market went down by a little more than 15%. "Today, that would be in the range of $6 trillion. That’s $20,000 for every American almost in wealth that at least for a time would be destroyed," he said.

"…we have our policymakers all focused on just how a dance is going to play out, the conclusion of which is that the United States is going to pay its debt sooner or later. So, I just think this is a foolish exercise. I hope it ends as soon as it possibly can," he added.

To keep track of all upcoming economic events that can impact the markets, kindly go through the Benzinga Pro calendar.

Read Next: Elizabeth Warren Touts Bi-Partisan Bill, Tells Banks: Can’t Expect To Keep A Ton Of Money ‘When You Blow Up’