Bill Clinton walks back debt-limit comments

Former President Bill Clinton suggested Wednesday that a short-term default might not be catastrophic, only to quickly walk them back through a spokesman later in the day.

Speaking at fiscal summit hosted by the Peter G. Peterson Foundation, Clinton said a short-term default might not be a disaster, but a long-term expectation that the United States would not pay on its debts would be. His comments came as lawmakers in both parties are haggling over a deal to increase the $14.3 trillion debt limit before the government defaults in August.

“If we defaulted on the debt once for a few days, it might not be calamitous," he said. "But if people thought we were literally not going to pay our bills anymore, then they would stop buying our debt.”

That suggestion seemed to run counter to the hard line Treasury Secretary Timothy Geithner has taken on the debt limit for months -- he maintained at a separate event Wednesday Congress had no choice but to raise the limit. It also may have given credence to arguments by some GOP members that the debt limit does not need to be raised immediately.

However, a Clinton spokesman said later in the day that the former president "inadvertently misspoke" on the matter.

"What he meant to say was that if a vote to extend the debt limit failed in advance of a default, that might not be harmful for a couple of days, but that if people thought that we might actually default, that in his words ‘we were literally not going to pay our bills anymore,’ then they would stop [people from] buying our debt,” Clinton spokesman Matt McKenna said, according to The Wall Street Journal.

Clinton "did not in any way mean to suggest that a default would not be highly damaging for the economy even for a very short period of time," he added.

The government bumped up against the debt limit earlier this month, but the Treasury Department has taken action to avoid a default, which Geithner says can be averted until Aug. 2.

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