The only Democratic U.S. president re-elected since FDR, and the last president to register a budget surplus in the past 30 years, has pointed, no-holds-barred advice for President Barack Obama: Don't blink.
Former President Bill Clinton, D-Arkansas, said the current president faces the political equivalent of what he faced in 1995-96 - a government shutdown.
This is the political equivalent of the government shutdown when I was president, Clinton said, The Daily Beast reported. The leadership of the Republican Party then figured that they could make the White House blink...The White House could blink. I hope that won't happen. I don't think they should blink.
Clinton, speaking at a future of cancer seminar, said the Republicans' idea of a compromise essentially is hollow.
[The Republicans] idea of a compromise is we're only going to get 85 percent of what we ask for and you're not going to get anything you asked for, Clinton. To the average person that's not much of a compromise.
Democrats and Republicans, currently at loggerheads over the appropriate amount of spending cuts and tax increases needed as part of a plan to increase the debt ceiling, need to come to an agreement fairly quick.
The U.S. Government borrowing authority ends on August 2. A failure by Democrats and Republicans to reach a deal on the debt ceiling could result in an event most economists for decades thought was unfathomable -- a default by the largest and most technologically advanced economy in the world.
On August 4, the U.S. Treasury Department is due to pay off $30 billion in maturing short-term debtIn theory, the United States could prioritize debt payments, but U.S. Treasury Secretary warned lawmakers in Congress Wednesday that the prioritization tactic would still cause investors to shun U.S. Treasury securities, commonly known as Treasuries.
Geithner has also repeatedly underscored that failing to raise the debt ceiling will have no constructive outcomes for the nation's fiscal condition, the task of deficit reduction, and U.S. and global stock and bond markets.
Republicans argue that Congress should substantially cut government spending to cut the budget deficit. Meanwhile, Democrats insist that revenue increases must be a part of the talks for any meaningful and enduring deficit reduction to occur.
Further, all three major insitutitonal credit rating services --S&P, Moody's Investors Service, and Fitch Ratings -- have said a failure to raise the debt ceiling may have an adverse effect on global confidence in American securities.