Debt Ceiling: Job Losses, Cuts to Retirement Savings Likely, but Preventable
Category: News & Politics
Via: jbb • last year • 25 commentsBy: Ayelet Sheffey, Juliana Kaplan (Business Insider)
S E E D E D C O N T E N T
House Minority Leader Kevin McCarthy (R-CA). Kent Nishimura/Los Angeles Times via Getty Images 
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- The US could default on its debt as early as June 1, Treasury Secretary Janet Yellen said.
- It could result in a severe economic downturn, leading to job losses and cuts to retirement savings.
- That could all be avoided if Congress passes a bill to raise the debt ceiling this month.
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Economic catastrophe for millions of Americans is less than a month away. It's totally avoidable. The real question is whether Congress will actually step in to stop it.
On Monday, Treasury Secretary Janet Yellen warned Speaker of the House Kevin McCarthy that the US could run out of money to pay its bills — and default on its debt — as soon as June 1. Raising the debt ceiling would solve that problem and keep the US from experiencing an unprecedented, and economically catastrophic, default, but McCarthy has been clashing with President Joe Biden since Republicans took over the House majority on the best approach to raise the limit.
Raising the debt ceiling means increasing the amount of debt the federal government is able to borrow to keep paying for programs already mandated by Congress, and Democrats have previously raised the alarm on the severe consequences for Americans should the US default. A report from the Joint Economic Committee in March found that a default could cost Americans $20,000 in retirement savings, monthly mortgage payments could climb, and private student-loan payments could surge. An analysis from Moody's Analytics found that even a short default could lead to losing 2.6 million jobs.
Republicans see the debt ceiling as a tool for making wide-ranging spending cuts, a long-held GOP priority. Democrats point to years of non-contentious and procedural raises as precedent for a clean raise, with no addendums or cuts.
And both sides are holding strong, as Republicans just barely passed through a package for a short-term raise with cuts, and Democrats have pronounced it dead on arrival.
Last week, the House passed McCarthy's bill to raise the debt ceiling, called the Limit, Grow, Save Act of 2023, by a narrow 217-215 margin. The legislation would raise the debt ceiling by $1.5 trillion, or through March 31, 2024, whichever comes first — and it included $4.5 trillion in spending cuts, including banning student-loan forgiveness and bolstering work requirements on welfare programs like SNAP.
Moody's Analytics recently found that McCarthy's plan to raise the debt ceiling attached to spending cuts could cost the country 780,000 jobs.
Even though the bill passed one chamber of Congress, it's highly unlikely to progress through a Democratic-controlled Senate and White House. Senate Majority Leader Chuck Schumer and his colleagues have referred to the bill as the Default on America Act — or DOA — and Schumer and House Minority Leader Hakeem Jeffries released a Monday statement calling on Congress to pass a clean debt ceiling bill, meaning no spending cuts attached.
"We do not have the luxury of waiting until June 1 to come together, pass a clean bill to avoid a default and prevent catastrophic consequences for our economy and millions of American families," Schumer and Jeffries wrote.
"Republicans cannot allow right-wing extremism to hold our nation hostage. For generations, Congress has made spending and revenue decisions as part of the annual budget process, which is currently underway. That is the appropriate place to debate and discuss our nation's fiscal picture — not in a hostage-situation in which extreme MAGA Republicans try to impose their radical agenda on America," Schumer and Jeffries added.
—Chuck Schumer (@SenSchumer) May 1, 2023
With Congress in session for just 12 legislative days ahead of June 1, Democrats and Republicans are finally convening. The White House confirmed Monday that Biden called McCarthy to invite him to a May 9 meeting with House Minority Leader Hakeem Jeffries and Senate Majority and Minority Leaders Chuck Schumer and Mitch McConnell.
"President Biden invited the four leaders to the White House to discuss the urgency of preventing default," a White House official said in a statement to Insider. "In that meeting, he will stress that Congress must take action to avoid default without conditions. And he will discuss how to initiate a separate process to address the budget and FY2024 appropriations."
It's unclear if Biden will budge on his refusal to negotiate raising the debt ceiling, but GOP senators are calling on him to do just that. "They have to participate, good Lord," Sen. Shelley Moore Capito told Punchbowl News. But Democratic Sen. Jon Tester told CNN that it would be a "big mistake" for the White House to reach a deal with Republicans that include spending cuts.
Democrats have previously raised the alarm on the severe consequences for Americans should the US default. A report from the Joint Economic Committee in March found that a default could cost Americans $20,000 in retirement savings, monthly mortgage payments could climb, and private student-loan payments could surge.
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Will McCarthy and the gop crash our economy?
Magic 8 Ball says, "The indication is very likely"...
Are McCarthy and the GOP the ones with the veto pen and threatening to use it? Magic 8 Ball says "NOPE"
"It could result in a severe economic downturn, leading to job losses and cuts to retirement savings. That could all be avoided if Congress passes a bill to raise the debt ceiling this month"
We go through this drama just about every year thanks to the Democrats. This time the issue is in the Democrats hands...if there is a default, it is their fault. They just want it raised so they can waste even more of the taxpayers money.
If they were smart, they could at least make an effort to help cut spending,
Trump exploded the deficit by over 3 TRILLION dollars, but republicans voted for every debt ceiling increase with no conditions.
Trump increased the debt by over 7 TRILLION dollars, but republicans voted for every debt ceiling increase with no conditions.
So is your point here that "because previous people were irresponsible, we should now continue to be irresponsible indefinitely?"
Seems a bit strange.
My point is that the republicans did their jobs to pay for money ALREADY SPENT, under Trump who was much more fiscally irresponsible. But as soon as a democrat is POTUS, republicans use the debt ceiling for extortion..
How many times did Sen Biden vote against raising the debt ceiling during the Bush presidency?
I don't know. Why don't you give us an in depth analysis of President Biden's voting record on budget and debt legislation for the thirty years he served in the Senate?
Sure about that?
Most of Biden's spending was simply throwing money on an already out of control bonfire simply so he could look generous and compassionate.
We are now in a period of high inflation, and the Fed is having to raise interest rates to the point where banks are failing and we're headed into a recession. We need to learn from 1979 and stop spending.
The money we need to borrow in order to continue to let Grandpa Joe spoil the grandkids is now costing us more than twice what it did 2 years ago. We are on a fiscally unsustainable path and shit is going to get very ugly if we don't stop what we're doing very soon.
The Magic 8 Ball doesn't have that one? Shocking.
It was at least 3, BTW.
In 2003, all but three Senate Democrats voted against raising the debt limit. Biden voted no.
In 2004, all but two Democrats voted against raising the debt limit. Biden voted no.
In 2006, every Democrat voted against raising the debt limit.
“The tsunami of debt created by the policies of this administration has to go somewhere. … But as the rest of the world copes with the waves of U.S. debt, we are now all in the same leaky boat. There is just so much of our debt other nations want to hold. The more of it they accumulate, the closer we are to the day when they will not want any more. When that happens, slowly or rapidly, our interest rates will go up, the value of their U.S. bonds will drop, and we will all have big problems. We need both more awareness, and more understanding, of this fundamental threat to our economic well being and the global economy. But the roots of that threat lie in the disastrous policies of this administration. Because this massive accumulation of debt was predicted, because it was foreseeable, because it was unnecessary, because it was the result of willful and reckless disregard for the warnings that were given and for the fundamentals of economic management, I am voting against the debt limit increase. In the 5 years he has been in office, President Bush has added more to our foreign debt that the 42 Presidents before him. … But he refused to take responsibility for his policies. He refused to admit that a changed world demanded a change of course. His refusal has pushed us deeper and deeper into the hole. … My vote against the debt limit increase cannot change the fact that we have incurred this debt already, and will no doubt incur more. It is a statement that I refuse to be associated with the policies that brought us to this point.” (Sen. Biden, Congressional Record, S2239-2240, 3/16/2006)
When was the last time a Republican President proposed, passed and signed a balanced budget? Congress can balance the budget any time if they had the guts to cut spending and raise taxes. What should be off the table is defaulting on our obligations already on the books which would crash the world economy!
Play a stupid game and win stupid prizes. Like the last time and the times before...
Perhaps a better question is:
When will a US President propose, pass and sign a balanced budget?
Who said anything about balancing the budget?
We're just talking about not setting new records for bleeding money.
I'm sure people who get their financial knowledge from a Magic 8 Ball certainly think it has to do with McCarthy.
Do you think that their prayers are being answered?
Oh look.
JBB with a moronic meme to cover up the fact she doesn't understand some basic fundamental concept.
Well that's certainly something you don't see every day.
Oh... wait....
Tell you what... Google a guy named Jerome Powell and get back to us.
I understand that irresponsible tax cuts are mostly responsible for our deficit...
Is the gop finally willing to raise taxes?
Lol. Look up the costs of entitlements.
The Bush cuts, or the Obama cuts or the Trump cuts?
Should there be a relationship between Federal Revenue and Spending?
Still relying on that Magic 8 Ball, i see.
I certainly hope not. I hope we're going to stop spending idiotic amounts of money and let the American people keep more of what they earn.
People can harp, gripe, whine, and throw tantrums. The fact is the debt ceiling cannot be raised without legislation from Congress. The House has done its part and passed a bill. Now it's up to the Senate to do something.
McCarthy has done his job and passed a bill through the House. That's how the process of democracy is supposed to work. It's Schumer that is failing to do his job and undermining the process of democracy. The full faith and credit of the United States rests in Chuck Schumer's hands.
How the Senate addresses the debt limit is entirely Chuck Schumer's choice. Schumer can put the House bill up for a vote. Schumer can push through an alternative bill. Or Schumer can play games and stall until the Federal government defaults. At this point, whatever happens depends entirely upon what Chuck Schumer chooses to do.
McCarthy passed a bill. Ball is in Schumer and Biden's court.