Local residents protest during a press conference in front of the capitol building in Washington D.C., Oct. 2, 2013. The U.S. government shutdown entered its second day Wednesday as both sides dug in their heels with no end in sight. (Xinhua/Fang Zhe)
U.S. President Barack Obama on Thursday said the U.S. economic shutdown that results from default would be dramatically worse if Congress cannot raise the debt ceiling later this month.
Obama made the remarks at a construction company in Rockville, Maryland, ramping up pressure on Republicans to make compromise, as the fight over the government shutdown quickly moved to a showdown over lifting the debt ceiling.
The U.S. federal government is set to run out of money to pay creditors if Congress cannot raise the debt ceiling by Oct. 17, according to the estimate of the U.S. Treasury Department.
Obama said the U.S. economy took a bad hit in 2011 when the House Republicans "flirted" with not raising the debt ceiling and the U.S. sovereign credit rating was downgraded for the first time in history.
He warned it would be "the height of irresponsibility" if the Republicans threaten not to pay the country's bills, which could damage the economy and lead to an economic shutdown.
"In an economic shutdown, falling pensions and home values and rising interest rates on things like mortgages and student loans, all those things risk putting us back into a bad recession," said the president.
Obama reiterated "there will be no negotiations" over raising the debt ceiling. "The debt ceiling is to let the U.S. Treasury pay for what Congress has already bought. That's why it's something that has been routine," he argued, adding that Congress has raised the debt ceiling 45 times since former U.S. President Ronald Reagan took office.
U.S. Treasury Department also warned in a report released Thursday that a potential debt default would be catastrophic to the macroeconomy. "In the event of a default, the U.S. economy could be plunged into a recession worse than any seen since the Great Depression," the report said.
