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US government flirting with disaster as default looms

Michael E. Kanell, Kelly Yamanouchi, James Salzer, Tia Mitchell, The Atlanta Journal-Constitution on

Published in News & Features

ATLANTA — If Congress and the White House cannot reach a deal on raising the debt ceiling and if the president doesn’t choose another way to avoid default, the economy will head into uncharted, but almost certainly painful territory.

Many veterans would not get benefits. Social Security recipients would not be paid. Doctors and nurses wouldn’t be compensated for treating Medicare patients. And defense contractors would see their payments cut or cut off.

Interest rates would rise, the value of the dollar would fall and unemployment would climb.

“It’s not apocalyptic, but it’s really bad,” said economist Jason Delaney of Georgia Gwinnett College. “It would instantly cause a recession. There is just no upside to this. It’s bad for everybody.”

Congress often authorizes the federal government to spend more than it has coming in revenue, which lends itself to deficit spending. The national debt is the accrual of those deficits over the years; wars, tax cuts and policies implemented during the COVID-19 pandemic have all contributed to the national debt.

The debt ceiling, created in 1917, sets a limit on how much debt the federal government can incur. It has been raised nearly 100 times, but only recently under Democratic presidents has it become a partisan weapon used by Republicans to demand cuts in future spending.


This year, GOP lawmakers have conditioned approval of a higher debt ceiling on cuts in future spending for social programs like food assistance and Medicaid. The White House has been negotiating toward a deal even though President Joe Biden initially declared he would only sign a standalone increase of the debt limit.

A majority of Americans hold negative views of how both sides have handled the issue, according to a poll by Monmouth University. Half of Americans polled said the issue should be dealt with “cleanly,” meaning they’d rather see lawmakers raise the debt ceiling and negotiate spending cuts separately. Only 25% of those polled wanted to combine the issue of a ceiling hike and cuts to spending.

Democrats have blasted Republicans for holding the national and global economies hostage.

“You’re talking about food insecurity, you’re talking about health care, you’re talking about teacher pay, you’re talking about all the things that are just vital, foundational kinds of funding and security for people around the country,” U.S. Rep. Lucy McBath, a Marietta Democrat, said recently.


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