Gov. Andrew M. Cuomo said a federal default could mean a $2 billion hit to New York.
As the government shutdown in Washington continues, Cuomo warned that New York’s fiscal health would be imperiled if federal government were to go into default—which is a looming crisis.
“Congressional dysfunction has already hurt New York and the nation’s economies by fueling a lack of consumer confidence nationwide. Jeopardizing our full faith and credit is a new level of recklessness and irresponsibility that would have dire consequences and could cause irreparable damage to our economy,” Cuomo said in a statement.
The Democratic governor and potential presidential candidate in 2016 said New York has made progress since the 2009 recession and has regained all the jobs it has lost. He also cited positive credit ratings from Moody’s Investor Services and Standard & Poor’s.
But Cuomo said the progress would be hindered if the federal government doesn’t resolve the stalemate, citing New York as the center of the financial markets. A report today from the Tax Foundation said New York has the worst business climate in the nation.
“Failure to act in Washington would put the national economy at risk, jeopardizing New York’s significant recovery and leading to additional fiscal pressures,” Cuomo’s news release said. “New York is the epicenter of the financial services industry, which is still recovering from one of the most cataclysmic periods in its history. A default of federal debt would reverse the progress that has been made and impact Wall Street profitability, employee compensation and, as a result, state revenues.”
If there was a default, Cuomo’s office said the state’s borrowing costs for projects could increase as much as $1 billion over 20 years.
And if the bond market was temporarily shuttered, it could jeopardize infrastructure projects, he said.