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Harris and Brainard: U.S. Debt Default Could Lead to Recession

In a statement on Thursday, Vice President Kamala Harris and leading White House economic adviser, Lael Brainard, indicated that a default on the U.S. debt, currently at $31.4 trillion, has the potential to plunge the American economy into a recession.

Vice President Kamala Harris
Vice President Kamala Harris

Democrats Activists and the Debt Default

In a teleconference with Democratic activists, Harris and Brainard appealed to the participants to communicate with legislators to show their opposition to a possible debt default imminent in less than a fortnight.

Maintaining Focus Amid Global Events

Despite President Joe Biden's current involvement in the Group of Seven summits in Japan, Harris stressed the importance of focusing on the impending default, stating, "A debt default could trigger a recession."

Negotiations Between White House and Congressional Republicans

To find a resolution to lift the $31.4 trillion debt ceiling, negotiators from the White House and congressional Republicans met at Capitol Hill, with further meetings planned for the following day.

Schumer's Statement and Lawmakers' Readiness

U.S. Senate Majority Leader Chuck Schumer said lawmakers should be prepared to return to Washington from recess within 24 hours if required for a vote. Schumer expressed his satisfaction with acknowledging bipartisan legislation as the best way to secure enough votes in the House and Senate.

Brainard on Negotiations and Healthcare

Lael Brainard, the director of the White House National Economic Council, stated that the Biden administration's negotiators had been instructed to reject any Republican proposal on the debt ceiling that may compromise Americans' healthcare or drive them into poverty.

Republicans' Proposal and the Response

Republicans, who have raised the threat of government default, are encouraging Democrats to accept stricter work requirements for certain federal aid programs and spending cuts in exchange for lifting the borrowing limit. Brainard emphasized the administration's objective in these negotiations is to arrive at a reasonable, bipartisan budget agreement.

Negotiating Team's Fight Against Extreme Changes

As Brainard mentioned, the negotiating team is determined to resist drastic changes that could undo the progress made in creating clean energy jobs, tackling climate change, and reducing costs for middle-class families.

U.S. Treasury Department's Statement on Debt Limit

The U.S. Treasury Department reaffirmed on Monday that without an increase in the debt limit, it expects to be able to cover the government's expenses only until June 1. This announcement further escalates the pressure on Republicans and the White House to reach an agreement soon. Regular adjustments to the debt limit are necessary as government expenditure consistently exceeds tax revenue.