The struggling U.S. housing sector will not stop the country's economic recovery but the Obama administration needs to deal with problems in the market, a top White House economic adviser said Sunday.
Housing is the one part of the economy that has been persistently underperforming due to the glut of houses for sale and weak demand.
"We still need to deal with these housing issues and it's going to take us substantial time as a nation to work our way out of what was a 10-year-plus bubble, but I do not believe that will prevent us from recovering," White House economist Austan Goolsbee said on CNN's "State of the Union."
The administration is already using taxpayer funds from its $700 billion bank bailout program to help prevent foreclosures and give struggling Americans a reprieve on their mortgage payments.
But the programs have had little impact on the overall housing sector. March home prices slumped below lows reached during the financial crisis in April 2009.
Goolsbee did not elaborate on what the administration could do to help the housing market recover.
The White House has little leeway to increase government spending to help spur the housing market to keep the economic recovery advancing. Political appetite for further government stimulus measures is low as lawmakers from both parties focus on deficit reduction.
The administration and Democratic and Republican lawmakers are trying to hammer out a budget deal to curb spending and raise the country's limit on how much can be borrowed.
The Obama administration says Congress has until August to increase the $14.3 trillion debt ceiling before the U.S. government is no longer able to pay its bills and will start to default on obligations, including payments to bondholders.
Goolsbee said he was optimistic that the debt ceiling issue could be resolved within the next month and he said Congress should not push the negotiations right up to the deadline.
"This is not an alarm clock. It would be extremely dangerous to get right up to the edge," he said on ABC's "This Week."
"You've seen some people even saying, 'well, it'd be OK if we defaulted for a short period.' That's not true. We shouldn't do that. We should resolve this over the next month," he said.
Underscoring the need for Congress to act quickly, Moody's rating agency warned last week that it would consider cutting the country's top-notch credit rating if there was no progress by mid-July to cut the $1.4 trillion deficit and raise the debt limit.
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