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Harvard Economist: Hitting Debt Ceiling Would Be Painful, Not Devastating

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CAMBRIDGE (CBS/AP) — The majority in government seems to agree, a deal on the debt ceiling needs to get done.

But White House spokesman Jay Carney reported little progress on any such compromise. “There is no deal, we are not close to a deal,” he said Thursday.

Noted Harvard economist Benjamin Friedman says if a deal isn’t reached, the government would have to cut spending by a third and the easiest targets would be Social Security, Medicare and Defense.

Combined, the three programs make up 60% of the budget.

WBZ NewsRadio 1030’s Mark Katic reports

“It doesn’t have to be Social Security and Defense and Medicare first. But before too long, those programs will have to be the largest part of the story,” Friedman told WBZ NewsRadio 1030’s Mark Katic.

Listen To The Extended Interview With Benjamin Friedman

He also noted the government may also delay money for retirees and the medical industry.

Friedman compared this to the government shutdown in the 90’s — the world didn’t end but it was painful for many Americans.

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