Shaheen: Hesitation on debt ceiling could be 'catastrophic'
If Congress does not raise the debt ceiling by the Aug. 2 deadline, it could trigger another global financial crisis and the country could experience a double-dip recession, U.S. Sen. Shaheen said Thursday in a conference call with the press.If the debt limit is not raised, the resulting default will have immediate, potentially "catastrophic" effects on businesses and individuals in New Hampshire, Shaheen said. "There are real consequences to a failure to act," she said.Additionally, going into default would case an instantaneous rise in interest rates across the board, affecting everything from mortgage rates for homeowners to borrowing rates for businesses, said Marty Regalia, chief economist for the U.S. Chamber of Commerce, who was also part of the conference call. It would also cause a "sharp and noticeable" drop in the value of the dollar, which in turn could increase the price of oil, which is measured in dollars, he said."These things are all going to happen fairly quickly if we go into default," said Regalia. "We've never done it, so we don't know how fast or how far, but the direction seems clear."In New Hampshire, an unpredictable economy means "enormous uncertainty for business," said Jim Roche, president of the Business and Industry Association of New Hampshire. "A key ingredient to business sustainability, profitability and job growth is certainty and predictability."If the debt issue is not resolved, it's "highly unlikely" companies in the state will be in a position to add jobs, he said."Customers are having us requote the same thing over and over because of a shyness to place an order," said Al Wassurzug, director of business development at Vulcan Flex Circuit Corp. in Londonderry. And when they do eventually place orders, he said it's for smaller quantities than it used to be.Uncertainty about the economy has also held his company back from hiring and investing in new equipment, he said."If you're going to build a plant ... you need to know what the investment horizon's going to be," said Peter Amos, senior vice president at Warner Power in Warner. "This type of situation going on in Washington completely undermines that confidence.""We're seeing the start of hesitation. Should the default happen, I think we're going to face certainly a new recession, not just in the United States but globally."Shaheen is a supporter of the "Gang of Six" deficit reduction plan, which was put forward July 19by a bipartisan group of six senators who propose cutting $3.7 trillion from the deficit over 10 years through measures that include reforming the tax code and cutting discretionary spending."It puts all aspects of government on the table and says we need to look at discretionary spending, defense spending, mandatory programs and we've got to look at revenues," said Shaheen."We really do have a situation that is within our control," said Regalia. "But it's going to be a very dramatic and draconian experience for everyone." -- KATHLEEN CALLAHAN/NEW HAMPSHIRE BUSINESS REVIEW