The White House has warned that if the Republican opposition does not back down from its refusal to raise the national debt ceiling, the United States will see economic disaster if it is in default for an extended period. In a timely manner and over a long period of default, the US labor market could lose more than eight million jobs this summer.
They added that if this catastrophic scenario materializes, gross domestic product will shrink by 6% and financial markets will lose 45% during the third quarter of the year.
But if the United States has seen default for a short period, then advisers associated with the White House Council of Economic Advisers expect the US economy to suffer from rising unemployment and a slowing recession.
This issue poses a great risk to the United States, as the country has never defaulted on its debt.
Republicans refuse to agree to higher federal debt ceilings, which is usually business as usual, unless Democrats first agree to massive spending cuts.
The administration warns that failure to raise the national debt ceiling will result in the United States defaulting on its $31.4 trillion in debt, setting a historic precedent that will shock both the United States and the world.
