WASHINGTON -(Dow Jones)- House Majority Leader Eric Cantor (R., Va.) acknowledged Tuesday that there are "huge consequences" if lawmakers fail to come to an agreement with the Obama administration to raise the U.S. debt ceiling in the coming days.
Speaking at a U.S. Chamber of Commerce lunch, Cantor said "it's a pretty good bet" that borrowing rates could increase dramatically if the U.S. fails to raise its debt ceiling by Aug. 2, after which the Treasury Department has said it will begin to default on its obligations.
"That could quickly wipe out any of the savings, over a matter of a couple days, that we're talking about" in the debt limit talks, Cantor said. He said for every 100 additional basis points in borrowing costs, the U.S. must pay an additional $1 trillion in interest over 10 years.
"We all know the severity of the situation," he added.
Talks between the White House and Republican congressional leaders broke down Saturday over White House proposals to include modest tax increases in a large deficit-reduction package. Republicans oppose any tax increases as part of a deal.
Cantor's comments come the day after President Barack Obama, appearing at a press conference at the White House, called on both Republicans and Democrats to make larger concessions on issues important to their respective parties. Seeking to place himself outside the Capitol Hill fray, Obama said policy makers need to think big: "If not now, when?"
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