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The GW Hatchet

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Trachtenberg fears ‘the great unknown’ of debt default

File Photo.

Former University President Stephen Joel Trachtenberg joined a nonpartisan group of academic and business leaders this week to call on Congress and the Obama administration to increase the debt ceiling.

Trachtenberg is one of 78 leaders to endorse the Washington-based think tank, Committee for Economic Development, in its nonpartisan message to the U.S. government urging an immediate increase in the debt limit, to protect American creditors and financial institutions.

CED’s statement demands a “credible resolution” to the debt standoff, but provides no details about what cuts should be included in the deal.

Trachtenberg said his involvement was prompted by personal concerns over the political stalemate. The United States will default on its debt Aug. 2 unless Congress and Obama can agree on a degree that raises the debt ceiling.

“I don’t think we know exactly what will result if we miss the deadline,” Trachtenberg said. “But it cannot be good for the world to see that the U.S. cannot be relied on to keep its word, pay its bills and act adult.”

Trachtenberg signed a petition earlier this week in support of the “Gang of Six” debt-reduction deal, which included a grand bargain that would reduce the nation’s deficit by $4 trillion in the next decade, reported The New York Times.

He said a default would be “no good” for the University. If GW has to borrow more money for University initiatives, he said, it could impact the cost of financial aid, the operating budget and ultimately admissions.

“It is the great unknown,” Trachtenberg said.

University spokeswoman Candace Smith said CED has not contacted University President Steven Knapp to sign the message.

President Barack Obama and Speaker of the House John Boehner both gave separate addresses to the nation Monday night on the impending default.

“This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much.  It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt.  And the cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small businesses and middle-class families get back on their feet right now,” Obama said.

Boehner, R-Ohio, countered the president’s message by saying Republicans will not hand the president a blank check.

“The president has often said we need a ‘balanced’ approach — which in Washington means: we spend more. . .you pay more. Having run a small business, I know those tax increases will destroy jobs,” he said.

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