Tags: Barack Obama | Economic- Crisis | Barack Obama | default | debt | downgrade | credit

Sen. Toomey: Obama Knows US Will Not Default

By Hiram Reisner   |   Tuesday, 26 Jul 2011 05:10 AM

Sen. Pat Toomey says there is “no scenario” in which he envisions America's defaulting on its debt — and the Obama administration admits privately that the threats it has been making for weeks are not true. The bigger problem is that the U.S. credit rating will be downgraded if fiscal problems are not addressed, the Pennsylvania Republican also said Monday on Fox News.
“First of all, there is no scenario in which we were ever going to default on our debt,” Toomey told Fox News’ Neal Cavuto. “I have been saying that since January. It was true then, it is true now. The only difference is, now the administration is privately admitting that it is true.

“The other fact that there is no avoiding is that the more important challenge that we face is not whether or not we raise the debt limit by August Second — it is whether or not we solve the underlying fiscal problem that we have,” he said. “And if we raise the debt limit without addressing that huge spending problem that is driving our deficits, then we will probably be downgraded. And that’s — frankly — that’s appalling to me that the U.S. government could even be in this position.”

Cavuto asked Toomey whether it is inevitable that America’s credit rating will be downgraded considering the financial chaos and continuing unresolved debate — and that ratings agencies might not even wait until August 2nd.

“Oh, I think that’s a very real possibility — they have made it clear,” Toomey said. “I mean, if we can believe what they have said, they have said unless we demonstrate the ability to change the trajectory and to stabilize our debt as a percentage of GDP [gross domestic product], they will downgrade us.

“And I’m very concerned that we might end up backing into some kind of deal here that doesn`t stabilize debt as a percentage of GDP — that doesn’t put us on a path to a balanced budget, because the president`s adamantly opposed to a balanced budget,” he said. “So, if we don’t solve the underlying problem, I’m afraid that there will be a downgrade.”

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