The Biden administration has issued a warning that the pending federal debt crisis could trigger an economic recession that would impact economic growth and trigger job losses across the United States.
“Hitting the debt ceiling could cause a recession. Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs,” the White House said in a letter (pdf) to state and local governments that was released Friday.
Arguing that Congress needs to raise or suspend the U.S. debt ceiling, the administration said the debt crisis could impact the country’s recovery after the CCP (Chinese Communist Party) virus pandemic. In July, Congress missed its deadline to suspend or raise the debt limit, prompting several recent warnings from Treasury Secretary Janet Yellen that her agency will exhaust its cash reserves.
“The U.S. economy has just begun to recover from the pandemic and a manufactured debt ceiling crisis would threaten the gains we’ve made and the future recovery,” the White House said.