WASHINGTON, DC — Just 9 days away from a catastrophic default crisis that all but guarantees a deep recession, and the fringe-right Freedom Caucus of the MAGA House Majority still insist they will not accept anything less than the extreme House default bill that punishes millions of low-income veterans, seniors and children while undermining public safety and costing 8 million Americans their jobs. Freedom Caucus members are also busy spreading ignorant and reckless lies that the default X-date is made up.
Meanwhile, House Speaker Kevin McCarthy has drawn his own unreasonable red lines, including no billionaire and no big corporation paying their fair share as part of any deal. While McCarthy and MAGA Majority hold the economy hostage over supposed debt ‘concerns’, they propose ballooning it by trillions under a bill endorsed by the Speaker and co-sponsored by 96 House Republicans that makes permanent Trump-era tax breaks geared towards the wealthy and large corporations. The nonpartisan Congressional Budget Office found the Republican pam would add $3.5 trillion to debt over the next 10 years.
There’s no spinning it. The default crisis just days away is 100% manufactured by the MAGA House Majority that could vote any time to responsibly pay the nation’s bills. Instead, the far-right Freedom Caucus is wasting precious time threatening to obstruct any bipartisan compromise and spreading misinformation about how close the economy is to the cliff’s edge. MAGA extremists in Congress insist on a lose-lose deal for everyday Americans: either cuts that kill 8 million jobs and punish poor veterans, seniors and the food-insecure – or a default crisis that disrupts Social Security checks, explodes interest rates, and tanks the global economy.
If they were serious about avoiding default, they wouldn’t hide behind an unreasonable plan that disproportionately hurts low-income veterans while letting wealthy tax cheats off the hook. MAGA extremists may think deliberately sabotaging the economy is a way to score political points against the President, but the public will know who to blame for the fallout and chaos.”
Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power.
“No corner of the global economy will be spared” if the U.S. government defaulted and the crisis weren’t resolved quickly, said Mark Zandi, chief economist at Moody’s Analytics.
Zandi and two colleagues at Moody’s have concluded that even if the debt limit were breached for no more than a week, the U.S. economy would weaken so much, so fast, as to wipe out roughly 1.5 million jobs.
And if a government default were to last much longer — well into the summer — the consequences would be far more dire, Zandi and his colleagues found in their analysis: U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4% to 8% and a stock-market plunge would erase $10 trillion in household wealth.
‘SHOCKWAVES THROUGH THE SYSTEM’
“If the trustworthiness of (Treasurys) would become impaired for any reason, it would send shockwaves through the system … and have immense consequences for global growth,” said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund.
Treasurys are widely used as collateral for loans, as a buffer against bank losses, as a haven in times of high uncertainty and as a place for central banks to park foreign exchange reserves.
BACKGROUND: Accountable.US’ ‘Cost of MAGA Default’ project puts a daily spotlight on specific harms the MAGA Majority’s default plan and brinkmanship will bring for Main Street and Wall Street alike – from tanking markets, frozen credit, lost jobs, disruptions to critical benefits like Social Security, and soaring interest rates on everything from car loans to mortgages. While the MAGA Majority claims they are holding the economy hostage over supposed debt ‘concerns,’ they insist on harmful cuts – crafted by the far-right House Freedom Caucus – aimed at average Americans while protecting and even expanding debt ballooning tax breaks for billionaires and big corporations that profiteer and ship U.S. jobs overseas. The clock is ticking. The MAGA majority should stop playing dangerous political games with American lives and the economy and responsibly pass a clean bill that allows the nation to pay its bills. The sooner they do, the less damage will be inflicted on Americans of all walks of life.
The extreme MAGA House Majority is threatening to manufacture a catastrophic default crisis and economic collapse. To hold the economy hostage, the House passed a long list of hugely unpopular and extreme ransom demands that promise pain for millions of average Americans including veterans, seniors, students, children, workers, and the food insecure. They voted to ship 100,000 high paying manufacturing jobs overseas while going out of their way to protect wealthy tax cheats that shift costs onto average Americans. The MAGA Majority’s proposed cuts that especially punish the poor and untenable, unworkable, and unreasonable, especially as they leave in place costly tax breaks for billionaires and big corporations. They’ve drawn “red lines” that any debt deal must include ineffective work requirements that fail to put people to work while leaving many more uninsured. With the nation now projected to run out of money as early as June 1st, Accountable.US’ Cost Of MAGA Default’ project continues to underscore the catastrophic consequences of a MAGA default that grows closer by the day.