Third Way: "If Republican brinksmanship forces the United States to default on its debt, it will have wide-ranging consequences on the US economy."

Last night, House Democrats voted to set up a process to address the debt limit with little help from House Republicans as their counterparts in the Senate continue to refuse to act responsibly to ensure America doesn’t default on its debts. This irresponsibility continues even as business groups, economists, and financial experts continue to warn that Republicans’ partisan games with America’s full faith and credit could lead to financial catastrophe. Stop us if you’ve heard this one before – this is far from the only political game Republicans have played with the debt limit recently.
A new report by Third Way outlines what exactly Republicans are voting for when they oppose addressing the debt limit. Not only would defaulting on our debt (which has never been done before) threaten our economic recovery from COVID-19, but Republicans’ refusal to govern responsibly and in the best interest of the American people could have widespread ramifications on working families across the country:
  • The United States could shed as many as 3 million jobsincreasing the unemployment rate by nearly 50%—as a result of GDP contraction.
  • It will become harder to borrow for everything from small business loans to student loans.
  • The dollar could lose its position as the world’s preeminent currency, and goods could become more expensive for US consumers.
  • Just from the interest rates the government would have to pay on bonds, the national debt would increase by $850 billion.