President Joe Biden’s administration on Sunday again warned of “catastrophic” consequences for the US economy, including massive job losses, if the country defaults as talks to strike a debt deal are expected to resume next week.
For weeks, lawmakers, bankers and the White House have been warning that the United States is about to default, a move that could take the country into uncharted territory with drastic consequences, including a looming recession and likely global financial contagion.
The nonpartisan Congressional Budget Office predicted on Friday that the country could default by June 15 if lawmakers fail to reach an agreement with Biden to raise current limits on government spending.
“We shouldn’t be here,” Deputy Treasury Secretary Wally Adeyemo said on Sunday’s CNN talk show “State of the Union,” reiterating the government’s call for lawmakers to break the deadlock and open the possibility of expand US loan.
“If Congress doesn’t raise the debt limit at the time of default, we’re going into a recession and that would be catastrophic,” he said. “The United States of America has never defaulted on its debts – and neither can we.”
Biden has said he wants a “clean” debt ceiling increase, but Republicans insist that any expansion in the country’s borrowing capacity, currently capped at $31.4 trillion, will come with significant spending cuts.
A long-awaited new round of debt ceiling talks between Biden and Republican leaders, including House Speaker Kevin McCarthy, has been postponed until next week.
Adeyemo acknowledged that “constructive” talks were progressing, but dismissed Republican claims that Biden does not want to curb federal spending. “The president has outlined a plan that includes $3 trillion in debt relief over 10 years,” Adeyemo said, referring to Biden’s budget request released in March.
Congress leaders should look for ways to agree on fiscal policy, “but as we’re having this conversation, there’s no reason we can’t raise the debt limit and avoid the country’s bankruptcy, which could lead to a severe recession and would cost millions of jobs.” said the deputy finance minister.
Biden addressed the issue Saturday in Delaware, where he spoke briefly to reporters.
“They are moving forward,” he said of the negotiations, but admitted that the two sides “are not there yet [a entendimento]”.
Source: DN
