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Former Obama economic adviser on the debt ceiling and the economy

Jason Furman joins Washington Post Live on Wednesday, Jan. 25. (Video: The Washington Post)

The battle over the debt limit is escalating on Capitol Hill with the new GOP House majority pledging to seize on the fiscal deadline to rein in federal spending. Jason Furman, former economic adviser to President Barack Obama, joins The Post’s Heather Long for a conversation about the risk of default and the stakes for the global economy.

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“I think the market is under-worried about [the debt limit.] I think they’re right to think we’re probably going to solve the debt limit. But if my doctor told me that I’d probably survive the year—only a 15 percent chance of dying— I wouldn't find that the most comforting diagnosis. I think the market might be a little bit too complacent on the debt limit.” - Jason Furman (Video: Washington Post Live)
“I think the Fed should continue to raise rates, at least two or three times more this year. And it may need to do more than that … If they raise rates two or three times more this year that’s not going to actually tighten financial conditions. In fact, mortgage rates might fall a little bit. Borrowing might even get a little bit cheaper. Those rate increases are already priced in. I think it would be a real mistake for the Fed to come in and have a big dovish surprise that loosened financial conditions.” (Video: Washington Post Live)
“I’d be prepared for four scenarios … That soft landing is no recession and inflation comes down to target. I’d put that at about a 15 percent chance. We could also have a hard landing where you have a recession, but the recession gets the job done … That’s maybe a one in four chance. The rest of the probability are two scenarios where inflation actually stays high. Either because we have continued overheating, no recession and continued high inflation. Or the fourth scenario is the worst, you have a recession, but even after the recession the inflation rate is still above three percent. I think that’s a really distinct possibility too.” - Jason Furman (Video: Washington Post Live)

Jason Furman

Former Economic Adviser to President Obama