ICYMI: MOODY’S: FAILURE TO RAISE DEBT CEILING WOULD WIPE OUT 6 MILLION JOBS, $15 TRILLION IN WEALTH

FOR IMMEDIATE RELEASE: September 22, 2021
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ICYMI: MOODY’S: FAILURE TO RAISE DEBT CEILING WOULD WIPE OUT 6 MILLION JOBS, $15 TRILLION IN WEALTH 

Washington, D.C. — A new report from Moody’s Analytics underlined the potentially “cataclysmic” costs of Republicans in Congress’ refusal to join Democrats to raise the debt ceiling. The report describes the scenario as “comparable to that suffered during the financial crisis” of 2008, with the American economy losing an estimated 6 million jobs and $15 trillion in household wealth, and the unemployment rate soaring to nearly 9 percent.

“Thanks to President Biden’s leadership, our economy has rebounded as we emerge from a historic pandemic, but our country’s recovery is deeply threatened by Republicans in Congress who refuse to join Democrats to raise the debt ceiling despite doing so repeatedly on a bipartisan basis during the previous Administration,” said Building Back Together Executive Director Danielle Melfi. “It is shameful that the Republican Party is willing to tank the economy and devastate the livelihoods and savings of middle and working class families in service of partisan politics.”

Key highlights from report

  • “A default would be a catastrophic blow to the nascent economic recovery from the COVID-19 pandemic. Global financial markets and the economy would be upended, and even if resolved quickly, Americans would pay for this default for generations.”
  • “The downturn would be comparable to that suffered during the financial crisis. That means real GDP would decline almost 4% peak to trough, nearly 6 million jobs would be lost, and the unemployment rate would surge back to close to 9%.”
  • “Stock prices would be cut almost in one-third at the worst of the selloff, wiping out $15 trillion in household wealth. Treasury yields, mortgage rates, and other consumer and corporate borrowing rates spike.”
  • “Treasury officials would face excruciating choices, such as whether to fail to pay $20 billion owed to seniors on Social Security, or to fail to pay bondholders of U.S. debt – a decision that could undermine faith in U.S. credit and permanently drive federal borrowing costs higher.”

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