Potential Default Could Result in Millions of Job Losses, Warns White House

A report released by the White House Council of Economic Advisers said that the default scenario, if extended in the country, could result in the loss of about eight million jobs in the US.

The paper added: “A recent Moody’s analysis using a different macroeconomic model came to a similar conclusion. It predicts that with a net increase in the government debt ceiling, job growth will continue over the next few quarters, adding 900,000 jobs. But below is a Long-Term Default scenario. job losses could amount to about eight million jobs, which is a staggering difference similar to what our projections show.”

The report says that without the ability to spend money on support measures such as extended unemployment insurance, federal and local governments will become helpless, which could happen in the event of a prolonged default. In this case, ordinary citizens will also inevitably have problems with loans from banks, which will have to sharply increase interest rates in the face of the uncertainty of the situation.

Notably, the US Treasury Department once again briefed Congress in January of the initiation of “extraordinary measures” on a projected $31.381 trillion government debt ceiling.

The White House is calling on Congress to raise the ceiling without any restrictions, but the House of Representatives, which is controlled by the Republican opposition, attributes the move to spending cuts.

For her part, US Treasury Secretary Janet Yellen had previously warned that without a decision on the public debt, the government would not be able to continue meeting all of its obligations, possibly by June 1st.

Source: News