Key takeaways:
- Treasury Secretary Janet Yellen has warned of “economic and financial catastrophe” if the debt ceiling is not lifted or suspended by the June 1 deadline.
- The Congressional Budget Office and the Treasury Department have projected that if the government doesn’t pay its bills for even a week, 500,000 Americans would lose their jobs and the economy would contract by 0.6%.
- Republican Congressman Patrick McHenry is working to come up with a solution to the debt ceiling issue and noted that a “protracted” default, lasting longer than three months, would trigger a Great Recession type of scenario.
Treasury Secretary Janet Yellen has warned of “economic and financial catastrophe” if the debt ceiling is not lifted or suspended by the June 1 deadline. With elevated inflation, high interest rates, and unease in the banking industry, the U.S. economic outlook is already clouded.
The Congressional Budget Office and the Treasury Department have projected that if the government doesn’t pay its bills for even a week, 500,000 Americans would lose their jobs and the economy would contract by 0.6%.
In an interview with “Face the Nation” on May 7, 2023, Republican Congressman Patrick McHenry of North Carolina said he was “merely drowning” in terms of his optimism for negotiations. When asked about the worst-case scenario, McHenry previewed some of his proposals.
McHenry is the Chairman of the House Financial Services Committee and is working to come up with a solution to the debt ceiling issue. He noted that a “protracted” default, lasting longer than three months, would trigger a Great Recession type of scenario.
The Treasury Secretary and the Congressman are both urging Congress and the White House to come to an agreement before the June 1 deadline in order to avoid economic disaster. With the future of the U.S. economy at stake, the pressure is on to find a solution that will satisfy both sides.
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