2:36pm

Thu July 14, 2011
Budget Negotiations

Senator Bennet Questions Fed Chairman over Increasing Debt Limit

Republicans say the dire warnings issued by Democrats if the nation’s debt limit isn’t raised are just “scare tactics”.

But during a banking committee hearing on Thursday, Federal Reserve Chairman Ben Bernanke said defaulting on U.S. debts could lead to higher unemployment and slow the nation’s economic recovery.

Here’s what he told Senator Michael Bennet (D-CO).

“Can you think of anything that would be more destructive to my desire to pay down our deficit than to fail to raise the debt ceiling?” Bennet asked.

Bernanke replied, “You tax my imagination.”

Senate leader Harry Reid (D-NV) is the latest Democrat to warn of a possible cutoff of Social Security payments if there is no deal to raise the government's borrowing limit by early August.

President Barack Obama made a similar statement earlier this week.