Top Economic, Military, Advocacy Groups Warn Republican Debt Default Would Cause Economic Catastrophe
From the Speaker’s Press Office:
Top economic, financial, and military leaders – as well as key advocacy groups – are issuing new dire warnings about the havoc a Republican-caused debt default would wreak on the U.S. economy.
Most recently, the Chairman of the Securities and Exchange Commission, White House Council of Economic Advisers, six former Secretaries of Defense from both parties, and the AARP are warning that if Republicans continue to block Democrats from lifting the debt ceiling, Medicare beneficiaries and veterans could see their support cut off, worldwide credit will freeze, and the global economy could plunge into a recession greater than the 2008 financial crisis.
Gary Gensler, the chairman of the Securities and Exchange Commission, warned lawmakers Tuesday that a US default would likely set off historic stress in financial markets because Treasuries are the bedrock of the entire system.
Gensler, who previously served as a senior official at the Treasury Department and led the Commodity Futures Trading Commission, added that there is great uncertainty over what would happen to mortgages, auto loans and money market funds — as well as the banks that rely on money market funds.
"We'd be in very uncharted waters. The uncertainties abound about this," Gensler said.
The SEC chairman said what is known, however, is that US Treasuries sit at the "base of our entire capital markets."
“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” officials at the White House Council of Economic Advisers warned. “Employers around the world would likely have to begin laying off workers.”
The potential for an ensuing global recession, they wrote, could be worse than the 2008 financial crisis, because it would come as countries continue to struggle to escape the coronavirus pandemic. Adding to the burden, Congress and President Biden would be unable to spend money to prop up the economy until the debt limit, which caps the amount that America can borrow, is raised.
“The federal government could only stand back,” they wrote, “helpless to address the economic maelstrom.”
The officials warn that even the threat of a default in 2011 pushed up mortgage rates for home buyers for months, and that an actual default could elevate them even further this time. They also say retirees, Medicare beneficiaries, members of the military and millions of other people who depend on federal payments could see their means of support cut off “quickly, even overnight in some cases."
These warnings follow a plea from Moody's Chief Economist Mark Zandi for Republicans to support a bipartisan debt ceiling raise and stop a "cataclysmic event."
During the Trump Administration, Democrats put country over party and helped President Trump and a Republican-controlled Congress raise the debt ceiling before and after the Republican Tax Scam added $2 trillion to the debt. Now that President Biden is in the White House, McCarthy and Congressional Republicans want to dine and dash even if it means killing 6 million jobs, ripping away $15 trillion in household wealth, and tanking the U.S economy.