STAMFORD, Conn. Mayor Michael Pavia said Friday he is not certain how the debt ceiling crisis will impact Stamford, but he knows it will. Decisions made at the federal level always trickle down to affect the state and municipal levels, he said.
The mayor called the situation's possible effect on the nation's ability to borrow the most serious issue. He was also worried about Stamfords ability to sell bonds as a result.
We are all faced with challenges during these extremely difficult and compelling times, Pavia said in a phone interview. We need someone to be step up and solve this mess."
According to state officials and members of the state's congressional delegation, the crisis in Washington could cause the financial services industry in Fairfield County and insurance industry in Hartford to collapse, creating a "catastrophic domino effect" that could ruin the state's top credit rating and send unemployment numbers even higher.
Those are possible scenarios if President Barack Obama and Congress fail to make a deal on the federal debt ceiling by the Aug. 2 deadline, state officials and congressional reps say.
"Raising the debt ceiling is essential, because defaulting would be catastrophic for job growth and our fragile economic recovery, and would dramatically raise interest rates," Democratic Sen. Richard Blumenthal said.
"Since it's never happened before, who knows what the federal government would be able to pay for," said Democratic U.S. Rep. Jim Himes. "But if we go past Aug. 2 without a deal, there is a real possibility of a credit rating downgrade in the United States, which is like a nuclear bomb going off in the financial system."
Himes said he expects a deal to be worked out between the president and Congress as the two sides "work feverishly over the weekend."
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