If Congress doesn't raise the debt ceiling, the U.S. could lose up to 6 million jobs
Should Congress fail to raise the debt ceiling and default on its payments, the results could be "cataclysmic," Moody's Analytics economists Mark Zandi and Bernard Yaros wrote in a report set to be released Tuesday, per The Washington Post.
Zandi and Yaros predict that, in a worst-case scenario of a prolonged debt ceiling breach, the American economy would plunge into an immediate recession comparable to the 2008 financial crisis. That could include a loss of 6 million jobs, a surge to 9 percent unemployment, and the dissipation of as much as $15 trillion in household wealth. It would also mean the Treasury will have to make choices such as whether to fail to pay seniors $20 billion their owed on Social Security or fail to pay bondholders of U.S. debt, which would "undermine faith in U.S. credit and permanently drive federal borrowing costs higher," the Post writes. And it's likely that at least some of the damage would be permanent, even if the impasse is resolved.
Both Republicans and Democrats agree the ceiling should be raised, and the odds remain high that it will ultimately happen, but the two sides just can't agree on how they'll do it. The GOP wants Democrats to go it alone and include the action in their $3.5 trillion reconciliation bill, while Democrats think it should require a bipartisan vote since Republican measures are also part of the reason why the lift is needed. Right now, the debt ceiling remains a "political pawn," and even the uncertainity from the current debate could deflate business investment and cost the U.S. a fair amount of jobs, which is what happened during debt battles during the Obama administration, the Post notes. Read more at The Washington Post.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.
-
Cicada-geddon: the fungus that controls insects like 'zombies'
Under The Radar Expert says bugs will develop 'hypersexualisation' despite their genitals falling off
By Chas Newkey-Burden, The Week UK Published
-
'Voters know Biden and Trump all too well'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Is the Gaza war tearing US university campuses apart?
Today's Big Question Protests at Columbia University, other institutions, pit free speech against student safety
By Joel Mathis, The Week US Published
-
Empty-nest boomers aren't selling their big homes
Speed Read Most Americans 60 and older do not intend to move, according to a recent survey
By Peter Weber, The Week US Published
-
Brazil accuses Musk of 'disinformation campaign'
Speed Read A Brazilian Supreme Court judge has opened an inquiry into Elon Musk and X
By Rafi Schwartz, The Week US Published
-
Disney board fends off Peltz infiltration bid
Speed Read Disney CEO Bob Iger has defeated activist investor Nelson Peltz in a contentious proxy battle
By Rafi Schwartz, The Week US Published
-
Disney and DeSantis reach detente
Speed Read The Florida governor and Disney settle a yearslong litigation over control of the tourism district
By Peter Weber, The Week US Published
-
Visa and Mastercard agree to lower swipe fees
Speed Read The companies will cap the fees they charge businesses when customers use their credit cards
By Peter Weber, The Week US Published
-
Reddit IPO values social media site at $6.4 billion
Speed Read The company makes its public debut on the New York Stock Exchange
By Peter Weber, The Week US Published
-
Housing costs: the root of US economic malaise?
speed read Many voters are troubled by the housing affordability crisis
By Peter Weber, The Week US Published
-
Feds cap credit card late fees at $8
speed read The Consumer Financial Protection Bureau finalized a rule to save households an estimated $10 billion a year
By Peter Weber, The Week US Published