House Speaker Kevin McCarthy and President Joe Biden are locked in a game of chicken, with Biden hoping for the debt ceiling to be raised with the fewest concessions to Republicans possible and McCarthy hoping to enact spending cuts, among other wish list items. Still, because of the politics of the situation, the two parties are not likely to allow a default, which would mark the first such lapse in history.Treasury Secretary Janet Yellen has said that the U.S.
That is why both sides are likely to come to a workable agreement — because neither side wants to be held responsible for what could be one of the worst economic blunders in recent history. It is also not a given which side would face the most blame, meaning that it is in the best interest of both to raise the debt ceiling.
The effects of a default are thought to be dire. The White House Council of Economic Advisers said that a protracted default would lead to an economic downturn as bad as the Great Recession, with over 8 million people losing their jobs. The entire value of the stock market could be shredded by an enormous 45%.
“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” Graves told reporters.