Senator Charles Schumer is trying to exert some pressure on House Speaker John Boehner, in advance of the speaker’s address to the Economic Club of New York tonight.
Schumer hosted a noon conference call with Roger Altman–the former deputy Treasury secretary in the Clinton administration who now runs Evercore Partners–to lobby Boehner to take the threat of default off the table in the upcoming negotiations about raising the debt ceiling.
“There is one standard and one standard alone for judging his speech,” Schumer said. “Speaker Boehner must provide unwavering assurance to the credit markets that no matter what happens he will not allow the United States to default on its obligations.”
Schumer called on Boehner to resist the freshman in his caucus, who have threatened not to vote for an increase without deep spending cuts, and he cited Boehner’s own comments last year, when the speaker said the new members would have to deal with the issue “as adults.”
“Speaker Boehner needs to have that adult moment right here and now,” Schumer said.
Altman called default “the equivalent of suicide” and compared it to the use of nuclear weapons.
“There can’t be any head fakes or demonstration shots with default, just as there can’t be with the use of nuclear weapons,” he said. “You either default or you don’t. There’s no saying, ‘Sorry, I didn’t mean it.’”
As such, both Altman and Schumer said it was much riskier than a government shutdown, which, in March, brought negotiations over the 2011 budget to the brink.
“If America were to default, even for 24 hours, that would have an unprecedent and a catastrophic impact on global financial markets and on American markets,” Altman said.
Of course, the speech tonight has political implications too. Were Boehner to rule out the possibility of default, it would clearly weaken his bargaining position vis a vis Democrats in the Senate and the White House, who are resisting the kinds of deep cuts Republicans are demanding. (Though Schumer said there was bipartisan agreement on the need for some spending cuts.)
“The speaker should not let concerns about maximizing his political leverage prevent him from reassuring our credit markets,” Schumer said. “Markets don’t want to hear more brinksmanship.”