Deadlock on debt dangerous, Fallin says
BY JIM MYERS World Washington Bureau
Thursday, June 30, 2011
6/30/11 at 8:51 AM
WASHINGTON - Oklahoma Gov. Mary Fallin said Wednesday the U.S. faces a dangerous debt limit situation that could harm the state's economy, but the Republican chief executive added that she opposes a simple increase in the nation's debt ceiling.
"I would vote no unless there are efforts to cut the spending,'' she said.
A former member of Congress, Fallin recalled previous debates over raising the debt limit.
"There are always promises that we will get spending under control, but they never do that,'' she said.
Fallin said she has not had any discussions on what might happen to Oklahoma's federal funding if the U.S. were to go into default, possibly as early as August.
"It is definitely a dangerous situation for the United States to be in,'' the governor said during a wide-ranging exchange with reporters for Oklahoma-based newspapers.
In Washington to lead a state delegation to a biosciences industry convention, Fallin spoke of the potential increase in interest rates and negative impact on bond ratings for the U.S. and the state if President Barack Obama and Congress fail to reach an agreement on how to deal with the debt limit issue.
"That would slow down economic growth in the nation,'' she said. "In the bigger scheme of things, that would affect Oklahoma and could affect our economic recovery.''
Michael Bird, federal affairs counsel for the National Conference of State Legislatures, said the nation has never breached its debt limit, so there is little to point to in predicting what would happen if an agreement is not reached this time.
Bird conceded that states would be in unchartered territory, adding, "States and local governments have got to be very wary and vigilant."
One scenario, Bird said, could have the federal government apportion the money that was coming into the Treasury and fund only certain functions, possibly at reduced levels.
That could mean states would face funding cuts in areas such as child welfare programs and food stamps.
Bird said states could try to fill the funding gap, hoping that the federal government would reimburse them later, but many states are facing their own budget problems and do not have such resources.
He said state economies also could be hit by ripple effects as contractors might receive only partial payments for ongoing projects.
Jim Myers 202-484-1424
Gov. Mary Fallin: "I would vote no" to raising the debt limit "unless there are efforts to cut the spending."