Lew warns against opening the door to default

Standard & Poor’s was the only rating agency to downgrade the country’s AAA bond rating after the 2011 debt ceiling debate. The agency defended its decision earlier this week. It said it does not expect another downgrade, but based its conclusion on the assumption that the $16.7 trillion borrowing limit will eventually be lifted. 

Earlier in the day the Treasury Department issued a report on the potential consequences if the debt ceiling is not raised before Oct. 17. It concluded that the market reaction could be catastrophic, and could potentially lead to the worst recession since the great depression. 

Lew reiterated that he has taken all the extraordinary measures he could to continue to create borrowing capacity and there are no other options after Oct. 17 if Congress does not act. 

“We don't have any more,” he said. “We just don't have any more.  And Congress has to act.”

Echoing the findings of the Treasury report, Lew said no one really knows how bad a default would be since it has never happened before. 

“Last time we saw market reaction to the threat of default — we never actually crossed the line,” he said. “No one knows with certainty how bad the consequences are if we cross the line.”