White House Warns Debt Default Could Cause Recession
The Biden administration on Friday issued fresh warnings about the potential damage that could result from a U.S. debt default.
"Hitting the debt ceiling could cause a recession,” a White House letter addressed to state and local governments said. “Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs.”
The recession would hit state and local governments hard, the White House warned. “If the U.S. defaults on its debt — cities and states could experience a double-whammy: falling revenues and no federal aid as long as Congress refuses to raise or suspend the debt limit,” the letter said. “This means critical state services will be at risk for budget cuts, from education to healthcare to pensions.”
A plea for bipartisan cooperation: At a meeting of the U.S. Conference of Mayors Friday, Mayor Nan Whaley of Dayton, Ohio, issued a plea for lawmakers to work together to address the debt ceiling.
“Both parties in Washington have added to our debt, and both parties have an obligation to make sure the United States can continue to pay its bills,” Whaley said. “This is one of the most basic responsibilities of Congress, and there is no good reason for lawmakers to create a crisis that undermines the full faith and credit of the United States.”
