Economists have spent months raising the prospect of economic catastrophe should the government default, and top military brass added their own dire assessment Thursday, warning that the crisis would have a “significant negative impact” on troops.
“Readiness clearly would be impacted. So our large-scale exercises that we do at various training centers would probably either slow down or come to a halt in many, many cases,” Mark Milley, the chairman of the Joint Chiefs of Staff, told journalists at the Pentagon.
McCarthy has said lawmakers will get 24 hours’ notice if they are required to return for a vote during the recess, with negotiators representing the Republicans and the White House reportedly closing the gap on their differences.
Speaking on Fox News Thursday, the speaker rejected demands for a “clean” bill and added that he would not agree to tax increases on corporations or the rich as an alternative to cuts for reducing the nation’s US$31 trillion-plus debt burden.
He pointed to a CNN poll out this week in which 60 percent of respondents said a debt ceiling hike should be accompanied by cuts, although 51 per cent of respondents in a new Monmouth University survey said they want the two issues to be de-linked.
“We know where our differences are, and we will continue to be at the table to try to solve this problem,” McCarthy said.
White House chief of staff Jeff Zients suggested Republican protestations over out-of-control government spending were disingenuous, pointing to their plan to extend Donald Trump-era tax cuts, which Democrats say would add US$3.5 trillion to the debt.
“Apparently no concerns about blowing up the deficit as long as it’s for the top 0.1 per cent of households in America,” he tweeted.
Raising the permitted national debt level – which is the job of bureaucrats rather than politicians in many countries – has no implications for future spending; it simply enables the government to make repayments on loans that have already been approved and carried out.
Only one other democracy – Denmark – has a formal debt ceiling, but it is managed without the political high drama that periodically grips Washington.
Deputy Treasury Secretary Wally Adeyemo told investors at a conference in Washington the default threat was a “manufactured crisis” that was already making borrowing more expensive and costing Americans money.
Without efforts to speed up the normal process, any agreement would require at least 10 days to be formalised into legislative language, pass the House and Senate and get to Biden’s desk.
A batch of Social Security payments worth about US$25 billion is scheduled to go out on Jun 2 and those payments could be halted if the Treasury Department is unable to cover loan repayments.
An estimated 27 million Americans would fall into poverty without Social Security.
A federal judge in Boston has set a May 31 hearing for a lawsuit filed by unionists contending that the 14th Amendment requires Biden to borrow funds to pay US obligations, regardless of what Congress does.