Biden White House officials and Democratic economists are now warning some leaders that if nothing is done to raise the nation’s $28.4 trillion debt limit, terrible injury could happen to the American economy.
In a letter to top Washington lawmakers this Wednesday, Treasury Secretary Janet Yellen said that America’s financial spot was teetering at the edge of catastrophe, stressing that without any intervention the United States government would be out of money by next month.
“Based on our recent data, the most likely result is that cash will be exhausted in October,” the secretary said.
As Congress discusses the debt limit, Yellen warned about the damage that uncertainty might inflict damage on the financial markets. She said the last debt limit showdown in 2011 led to the United States’ credit rating getting downgraded for the first time ever.
“A delay that puts into question the U.S. government’s ability to take care of its obligations and could likely cause irreparable harm to the economy and worldwide financial markets,” she said.
Others, too, have issued alarms, forewarning about the effects of a financial default from America or another government shutdown that might be irreversible.
“In short, a default will be a financial cataclysm,” CNN said. “Interest rates would go up, the stock market would go down, retirement accounts would get hit, the value of the United States dollar would go down and damage the financial reputation of the world’s superpower.”
“It would be economic Armageddon,” Mark Zandi, a Dem economist who is the head of Moody’s Analytics, said to the network. “It is complete craziness to think of not funding our debt on time.”
JPMorgan Chase’s CEO Jamie Dimon also pushed lawmakers to take action in May, according to a report from CNN. At this time, he stated that a default “might cause a cascading catastrophe and do unbelievable damage to America for 100 years.”
The remarks come as lawmakers come to a decision this month about the debt limit. Reuters said on Tuesday that with both Democrats and Republicans entrenched, the debate might “become a huge game of chicken.”
Author: Blake Ambrose