Congressional Democrats warned on Thursday that a refusal by Republicans to raise the debt limit would imperil retirement benefits for millions of Americans, while raising interest rates even higher.
Democrats on the Joint Economic Committee unveiled a report estimating the fiscal impact of Congress refusing to raise the cap on how much the federal government can borrow to meet its expenses.
Sen. Mike Lee of Utah, top Republican on the JEC, said earlier this week that it wasn’t unusual for Republicans to expect Mr. Biden to negotiate over spending cuts in return for increasing the borrowing limit. If the same result were to happen today, the centrist-leaning Third Way think tank estimates that 401 retirement savings accounts could lose $20,000. JEC Democrats say the impact could be worse for individuals trying to buy new homes, cars, or those trying to start a small business.— $800 more on a car loan.— $54,000 more over the span of a 30-year mortgage, or about $150 more per month.Sen.
“Why are we having a banking crisis? Because government spent too much and created inflation,” said House Speaker Kevin McCarthy, California Republican. “Should we do exactly what the president is saying, just lift the debt ceiling and create more inflation and more banking problems?”Treasury Secretary Janet Yellen, who has warned that the U.S. will run out of money to pay its bills by early summer, said this week that failing to raise the debt limit would invite an economic “catastrophe.
Some Republican and Democratic lawmakers agree that the Constitution requires the federal government to honor its debt, which currently stands above $32 trillion. The requirement means that even if Congress refuses to raise the debt ceiling, incoming tax revenue will be used to pay the roughly $500 billion in annual interest owed to the nation’s creditors.
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