The White House, amid a confrontation with the Republican opposition over public debt, predicted an economic disaster in the United States on Wednesday in a state of protracted stagnation.
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President Joe Biden’s economic advisers estimate that if the world’s leading power permanently stops meeting its fiscal deadlines, it could lose more than 8 million jobs this summer, and see GDP fall by 6%.
Stock markets will unwind 45% in the third quarter, predicted those advisors, gathered at the White House Council of Economic Advisers.
They contend that even in the event of a short default, the US economy would suffer higher unemployment and a smaller recession.
The US CEO deploys this disaster scenario as Joe Biden tries to increase pressure on the conservative camp on public debt.
The 80-year-old Democrat says Republicans, who control one house of Congress, should vote quickly and unconditionally with Democrats to raise the maximum allowable public debt.
He proposed a May 9 meeting of key congressional leaders representing the two major parties.
The opposition is calling, in return for this vote, to cut public spending.
The issue of raising the debt ceiling, which is a unique American demand, was for a long time considered a parliamentary formality, but it began to turn into a political confrontation when Barack Obama was president.
The federal government did indeed hit that famous ceiling, of $31,000 billion, in mid-January, but has so far managed the situation with accounting maneuvers.
However, the US Treasury warned that if the vote in Congress fails, the government may find itself forced from June 1 to make significant cuts in some social expenditures.
Before falling into a potentially unprecedented sovereign default situation, which would see America unable to meet certain fiscal deadlines.
