‘Beyond Reckless’: Biden Economic Adviser Sounds Alarm on House Republicans’ Debt Ceiling Threat
Jared Bernstein warned if Congress fails to raise the debt ceiling in time to prevent the United States from defaulting, it will spell serious financial trouble for Americans.
On Friday, Secretary of the Treasury Janet Yellen said she expects the U.S. to reach the maximum amount the country can borrow on Thursday. She stated the Treasury Department will use “extraordinary measures” to keep the government funded. These measures she said, will be exhausted before early June.
Thanks to a 1917 law, the U.S. is one of the few countries that has imposed a limit on the amount of debt it may hold. This has prompted several battles between both houses of Congress and the White House, such as the ones seen in 2011 and in 2013.
Armed with their new House majority, Republican lawmakers in the chamber indicated they are prepared to use that leverage to force the Democratic-controlled Senate and White House to agree to spending cuts. The GOP conference has gone so far as to prepare a contingency plan in case the U.S. defaults on debt obligations, which the U.S. has never done.
On Friday’s The Last Word on MSNBC, Bernstein, who serves on the Biden administration’s Council of Economic Advisers gave the state of play to guest host Ali Velshi.
“In my view, it can’t be repeated enough,” Bernstein said. “When you’re talking about the debt ceiling, raising the debt ceiling, you’re talking about meeting spending obligations that Congress and the president have already agreed to.”
“Once you breach the full faith and credit of the United States, you’ve breached it across the board,” Velshi chimed in.
“I don’t care what you want to call it, but unless the debt ceiling is unconditionally increased… not only will you be in default, but the result will be, as you’ve mentioned, the loss of millions of jobs, but also a spiking in interest rates,” Bernstein said. “Once you’ve breached the full faith and credit of the U.S. dollar, you’re talking about undermining one of the safety, most pristine currencies in the world.”
Bernstein added a default would push the costs of borrowing higher on everything including “our mortgages, our auto loans, our credit card,” as well as higher payments on the nation’s debt.
“So, the exact opposite of what the Republican caucus says it’s up to,” he added.
“We’re at a fork in the road now,” Velshi replied. “We can make good decisions or bad decisions, but we’re at the edge.”
“We are making real progress towards that steady, stable transition to growth, ” Bernstein responded. “The idea that you would want to undermine the full faith and credit of the government, to actually take steps that would far, far increase the likelihood of negative things happening in not just our economy, but in the global economy is beyond reckless, beyond irresponsible. I’m not sure I have the adjectives for it right now.”
Watch above via MSNBC.
