White House Says Debt Ceiling Delay Could Cause “Catastrophe”
Posted on 05/09/2023
Reports by the Congressional Budget Office and the U.S. Department of the Treasury say the government cannot pay its bills for long, with the “X-date” being moved up to June 1, less than a month away. The White House reported: “History is clear that even getting close to a breach of the U.S. debt ceiling could cause significant disruptions to financial markets that would damage the economic conditions faced by households and businesses. An actual breach of the U.S. debt ceiling would likely cause severe damage to the U.S. economy.”
The fear is “the economy would quickly shift into reverse, with the depth of the losses a function of how long the breach lasted. A protracted default would likely lead to severe damage to the economy, with job growth swinging from its current pace of robust gains to losses numbering in the millions.”
The White House further went on to state that interest rates would rise, causing greater expenses for everything from mortgages to credit cards. Also, “the cost of insuring U.S. debt has also risen substantially and is now at an all-time high.” A temporary default may lead to unemployment for 2 million, said the White House, citing Moodys statistics.
Chaos Unfolds
Treasury Secretary Janet Yellen is personally calling U.S. business leaders to warn them of the negative potential if the ceiling is not raised. This is an irregular step for the Department of the Treasury. Meanwhile, The National Association of Government Employees which represents 75,000 federal employees, has brought a lawsuit that names Secretary Yellen and President Biden in a Massachusetts court. The argument being made is that the debt ceiling itself is unconstitutional. The U.S. National debt reached a new high of US$ 31.7 trillion on Monday, May 8.
