White House Warns of Economic Catastrophe Without Debt Limit Action

A general view of the White House in Washington, USA on July 15, 2021. REUTERS / Jonathan Ernst / File Photo

WASHINGTON, Sept. 17 (Reuters) – The White House warned on Friday that a failure by the U.S. Congress to extend the debt ceiling could plunge the economy into recession and lead to cuts to essential public services.

The government faces an October debt limit date, after which it might not be able to pay all of its bills without Congressional approval.

President Joe Biden, a Democrat, and his aides tried to negotiate a deal with Republicans to resolve a showdown over raising the federal borrowing limit to $ 28.5 trillion.

The administration is warning lawmakers that the country risks another financial crisis and default on its payment obligations.

“Economic growth would weaken, unemployment would rise and the labor market could lose millions of jobs,” the White House said in a new fact sheet.

For months, Treasury Secretary Janet Yellen urged Congress to act, saying the cash flow and “extraordinary measures” used to temporarily fund the US government would run out in October.

But Republicans, who lost control of the White House in the 2020 election and do not hold a majority in the Senate or House of Representatives, balked and put the potential crisis on the Democrats’ shoulders. Read more

“It is absolutely indescribable, unthinkable that we allow the federal government to default on the obligations it has already undertaken,” White House economic adviser Brian Deese told MSNBC on Friday.

“We are confident it will happen.”

Reporting by Susan Heavey, Steve Holland and Trevor Hunnicutt; Editing by Raissa Kasolowsky, Chizu Nomiyama and Andrea Ricci

Our Standards: Thomson Reuters Trust Principles.

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