Federal default could impact millions of American jobs, government services
A U.S. government default could have substantial consequences for average consumers, according to the Associated Press.
More than 8 million people could lose their jobs; millions of Social Security beneficiaries, veterans, and military families could lose their monthly payments; and vital federal services, including border and air traffic control, could be disrupted if workers cannot receive their government paychecks. A recession could be imminent.
President Joe Biden and the top congressional leaders from both parties met at the White House on Tuesday to seek a resolution, their second such meeting in recent weeks.
If the government’s legal borrowing limit of $31.4 trillion is not raised or suspended by June 1, the result could be financial havoc. The inability to borrow money to keep paying government obligations could mean businesses sent into bankruptcy, crashes piling up across financial markets, and lasting economic pain.
The damage would be financial, but the cause would be political, a breakdown between Republicans and Democrats, rather than a problem with the U.S. economy.
Republicans want spending cuts in exchange for raising the debt ceiling, saying the current pace of spending is unsustainable. Biden and congressional Democrats want the debt limit raised without conditions, arguing that the two issues should not be linked.