U.S. lawmakers need to get a grip on the seriousness of the budget impasse in Washington and its reverberations around the world, Finance Minister Taro Aso warned Tuesday.
Aso, who also serves as deputy prime minister, said the Republican Party’s ultraconservative tea party faction appears to be unaware of the wider consequences of the U.S. government’s partial shutdown and the budget crisis that it set in motion.
“Many of them don’t seem to understand well the magnitude of the international impact this problem could have,” Aso said at a news conference, according to Dow Jones Newswires.
“In the worst scenario, there will be a default, which is serious” for Japan, one of the biggest holders of U.S. government bonds, Aso was quoted as saying by the Nikkei financial newspaper.
“The impact is big at a time when the (Japanese) economy is about to grow,” he added.
But Aso also sounded optimistic, saying he expects the issue to be resolved.
“I guess there will be some compromise in time,” he told reporters.
With just days to go before Washington runs out of cash to pay its bills, Republicans and Democrats said Monday (Washington time) that they were close to an agreement to end the standoff that has paralyzed the government for two weeks.
Japan holds some $1.1 trillion in Treasuries, making it the biggest lender to the U.S. government after China.
Aso made similar remarks Friday in Washington after he attended a meeting of finance chiefs of the Group of 20 major economies.
“Japan expects this issue to be resolved once and for all without delay,” Aso said. “This is not only a matter for the United States.”
Aso suggested the United States needs a solution more permanent than a proposed deal to extend the debt ceiling for six weeks to avert default next week.
Without a deal, there would be “graver consequences than just the closures of national parks, so we are looking at this with a very close eye,” he said.
The U.S. government has been partially shut down as Republicans refuse to approve funding unless President Barack Obama guts his signature reform of expanding health care coverage.