ICYMI: Biden Administration Report Cautions Consequences, Concrete Impacts Of Republican-forced Default

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Report: “Everyone in America would feel the effects of a default.”

 Washington, D.C. — Today, as the Senate prepares to vote on raising the debt ceiling and preserving the full faith and credit of the U.S. government, the Biden-Harris Administration’s Council of Economic Advisors released a new report highlighting the concrete impacts a default would have for everyday Americans. The report underscores that “everyone in America would feel the effects of a default” — from retirees and veterans to Americans on Medicare and families with children.

“We cannot waste any more time with partisan games and political brinkmanship when it comes to the full faith and credit of the United States,” said Building Back Together Executive Director Danielle Melfi. “The clock is ticking. Senate Republicans must join Democrats in averting a government default — as they have done multiple times during the previous administration. To do anything less would harm the millions of Americans we are working so hard to build back better for.”

Key highlights from the White House Council of Economic Advisors’ report

  • “A default would fundamentally hinder the Federal government from serving the American people. Payments from the Federal government that families rely on to make ends meet would be endangered. The basic functions of the Federal government—including maintaining national defense, national parks, and countless others—would be at risk. The public health system, which has enabled this country to react to a global pandemic, would be unable to adequately function.”
  • “Furthermore, a default would have serious and protracted financial and economic effects. Financial markets would lose faith in the United States, the dollar would weaken, and stocks would fall. The U.S. credit rating would almost certainly be downgraded, and interest rates would broadly rise for many consumer loans, making products like auto loans and mortgages more expensive for families who are subject to interest rate changes or taking out new loans. These and other consequences could trigger a recession and a credit market freeze that could hurt the ability of American companies to operate.”
  • “In 2020, almost 50 million residents received retirement benefits through Social Security, and 6 million received survivors benefits […] And yet, if we default, these Americans may not receive their Social Security payments on time, or even at all.”
  • “Health coverage during a pandemic would also be in doubt. Over 60 million people across America are on Medicare, 75 million are enrolled in Medicaid, and almost 7 million children receive coverage through the Children’s Health Insurance Program (CHIP) […] Although affordable health care is vital, particularly during a pandemic, millions could find themselves without coverage.”
  • “A default threatens veterans’ programs as well, with over 9 million veterans relying on physical and mental care, in addition to other supports.”
  • “For example, the Federal government keeps our country safe by paying the salaries of 1.4 million active duty military personnel and their families. The deployment of personnel, the maintenance of equipment, the procurement of supplies, and other support activities would risk being frozen after a default, hampering the defense of the country at a time when there are ample threats to national security.”
  • “The Federal health response to COVID requires inspections and certification of medications that could halt without funding, including vaccine and therapeutic approvals through the FDA, just as the COVID vaccine for American children is going through the approval process.”
  • “A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge. Employers around the world would likely have to begin laying off workers.”