The White House warns of economic disaster if the debt ceiling is not raised

The US presidency, in the midst of the brinkmanship in which it has dived into with the Republican opposition over the national debt, predicted yesterday (Wednesday) an economic disaster in case the US is forced to declare a default for an extended period of time.

President Joe Biden's economic advisers estimate that if the world's biggest economic powerhouse stops paying its debts for a long time, it will lose more than 8 million jobs and see its GDP plunge 6% or more.

The money market would lose 45% of its value in the third quarter, predicted the president's economic advisors, the so-called Council of Economic Advisors.

They pointed out that even if the US federal government were to declare a default for a short period of time, the US economy would experience an increase in unemployment and a recession, albeit a minor one.

The presidency released this disaster scenario at a time when President Biden is trying to increase pressure on the right on the national debt.

The octogenarian Democrat says Republicans, who control the House of Representatives, must as soon as possible and unconditionally vote with Democrats to raise the federal borrowing limit.

He called a meeting next Tuesday, May 9, with the four Congress leaders representing the two parties.

The opposition demands that in order to approve any increase in public debt there must be drastic cuts in public spending for a decade.

The issue of raising the debt limit, a US peculiarity, was for a long time considered a mere formality, but suddenly it became the focus of political debate during the years of Barack Obama's presidency.

The federal government has in fact already exceeded the famous $31 trillion limit since mid-January and has so far been handling the problem with accounting maneuvers.

However, the Treasury Department warns that if there is no agreement and no vote in Congress, the federal government may be forced to make drastic cuts in various categories of social spending as of June 1. Before it falls into a declaration of a default, an unprecedented sovereign default, a situation that would have consequences not only for the US but also for the global economy.