June 13, 2024

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The White House fears that a debt default could spell economic disaster for the United States

The White House fears that a debt default could spell economic disaster for the United States

President Joe Biden’s economic advisers have warned that if the world’s leading power permanently stops meeting its fiscal deadline, it could lose more than 8 million jobs this summer and see its gross domestic product drop by 6%.

The White House, in a full-on battle with Republican opposition over the public debt, predicted on Wednesday that a long-term US debt default would spell economic disaster. For example stock markets will fall 45% in the third quarter, while millions of jobs will be lost and BIP will fall 6%.

These advisers, assembled in the White House’s “Council of Economic Advisers,” ensure that even in the event of a brief normalization, the U.S. economy will experience an increase in unemployment and, at a minimum, a recession.

The U.S. executive is releasing this dire scenario as Joe Biden tries to increase pressure on the conservative camp over the public debt.

A fight between Democrats and Republicans

The 80-year-old Democrat says Republicans, who control one house of Congress, must vote quickly and unconditionally with Democrats to raise the maximum allowable public debt limit.

He proposed a meeting of key Congress leaders representing the two major parties on May 9. In response to this vote, the opposition is asking for cuts in public spending.

The issue of raising the debt ceiling, a uniquely American demand, has long been considered a parliamentary formality, but began to become a political conflict during Barack Obama’s presidency.

The federal government actually reached this popular ceiling of $31,000 billion in mid-January, but has so far been managing the situation through accounting maneuvers.

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However, the US Treasury warned that the government would be obliged to make drastic cuts in some social spending from June 1 if it failed to pass a vote in Congress.

Before falling into a sovereign default situation, completely unprecedented, that would leave the US unable to meet certain financial deadlines.

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