U.S. default this fall would cost 6 million jobs, wipe out $15 trillion in wealth, study says

[LastLiberal in PalmSprings]

Washington Post

Mark Zandi, chief economist at Moody’s Analytics, found that a prolonged impasse over the debt ceiling would cost the U.S. economy up to 6 million jobs, wipe out as much as $15 trillion in household wealth, and send the unemployment rate surging to roughly 9 percent from around 5 percent.

Lawmakers in both parties agree that the debt ceiling must be raised to avoid economic calamity, but their standoff over how to do so has intensified. Despite the national debt increasing by close to $8 trillion under President Donald Trump, Republicans have been adamant that they will refuse to help Democrats increase the debt ceiling, in opposition to President Biden’s spending plans.

The Treasury Department has said it will exhaust its “extraordinary measures” to pay the U.S. obligations sometime in October, giving lawmakers little time to act to head off calamity. “This economic scenario is cataclysmic. … The downturn would be comparable to that suffered during the financial crisis” of 2008, said the report, written by Zandi and Bernard Yaros, assistant director and economist at Moody’s Analytics.

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The GQP's plan continues to be revealed:

Make people adverse to masks and vaccines, ensuring a high mortality rate from COVID.

Blame all the deaths on Biden, including those which occurred under the last administration.

Refuse to raise the debt ceiling, thereby crashing the economy, which has been exceptionally strong as a result of Biden's COVID Recovery Act.

Blame the crash on Biden.

Flip the House and Senate. Manchin and Sinema switch parties the day after the election.

Continue undying loyalty to TFG as he exhorts, "Only I can fix it."

Stage another coup, either physically or by making it impossible for Democrats to win at the ballot box.

After the 2022 election Biden's out -- or at least his ambitious agenda is dead. Trumpism takes over, and everything is the way it ought to be.

Would Moscow Mitch be so cynical as to crash the economy to regain power? Would Abbott and DeSantis be willing to kill tens of thousands of adults and children to position themselves to make a run for the presidency as "The Second Coming of Donald Trump"?

Does the Pope shit in the woods?

[PoliticAverse]

1. Republicans can't stop a debt limit increase because Democrats can pass it via reconciliation. n/t

[LastLiberal in PalmSprings]

3. Don't Manchin and Sinema have to go along to make that work?

Both have expressed a dislike for large numbers.

[PoliticAverse]

6. Neither would vote against a debt limit increase. n/t

[Drunken Irishman]

7. But if it's used on raising the debt ceiling, doesn't that mean it can't be used on infrastructure?

They get two the year, right? One was already used. They use up this one and that pretty much guarantees the infrastructure bill is delayed until 2022... just as Manchin wanted.

[PoliticAverse]

9. It's a game that's being played - who gets the blame for the debt. Now we know...

that the debt limit involves paying for spending authorized in the past and there really is no point in not raising the limit. But Republicans want to put the onus on Democrats and Democrats don't want to take the blame. Democrats want a bill to raise the limit with some Republicans to support it so Democrats don't get to be singled out (they are planning to attach it to a 'must pass' bill Republicans most likely have to support). If that fails (and we'll have to see see how much 'chicken' each side is willing to play) then Democrats can go to plan B, which is to make a separate debt limit bill. If that fails to pass they can go to plan C and include the debt limit increase in the (currently) $ 3.5 trillion (but most likely going to shrink) bill which is going to be passed via reconciliation (they have until around mid-October).

It's all about the 'blame'.

The bi-partisan infrastructure bill that Republicans and Democrats have agreed to already is likely to pass near the end of September and be separated from the passing of the $ 3.5T reconciliation bill.

[Celerity]

13. we are not passing it through reconciliation

https://www.democraticunderground.com/?com=view_post&forum=1002&pid=15882727

[Drunken Irishman]

19. That will seal the deal: Republicans will massacre the Dems in 2022 & Biden will be a one-termer.

If we default, the economy is going to collapse and while Republicans will get the initial blame, come November, 2022, it'll be the Democrats who are tossed out and then in 2024 it'll be Biden because that's just how these things tend to work.

It's going to be a bloodbath for the Democrats and that's exactly what the Republicans want. They'll continue to hold the country hostage knowing in the end the voters will forget what happened and blame the party in power for the economic crisis. Good plan.

[Celerity]

12. except that we are not doing it through reconciliation, we announced that 2 weeks ago

Democrats will not raise debt limit in $3.5 trillion bill -Pelosi

https://www.reuters.com/business/democrats-will-not-raise-debt-limit-35-trillion-bill-pelosi-2021-09-08/

And now, yesterday

U.S. House approves bill to suspend debt limit, fund government

https://www.reuters.com/world/us/us-house-vote-tuesday-fund-govt-through-dec-3-raise-debt-limit-2021-09-21/


The Rethugs will filibuster it.

They want a government shutdown. It will potentially cost 6 million jobs lost, 9% unemployment rate, and multiple endogenous shocks to the equity and bond markets.

They are banking on it shredding Biden's approval numbers, even though they are the ones actually causing it.

[Just_Vote_Dem]

14. And the Repubs will blame us for it

and they know the media will go along with it

[Celerity]

15. more than likely, unfortunately, but let us hope not, we need to come out punching HARD

[Just_Vote_Dem]

16. I hope we do punch hard

Thanks for your posts and input

[Drunken Irishman]

20. Punching is irrelevant. It's always the party in power who gets the blame.

Hoover didn't cause the Great Depression but he sure got the blame for it. It doesn't matter how hard the Dems fight the narrative, if the economy collapses, the voters are inevitably going to blame the party who's in power because that's always what they do. Every single time. See: McCain in 2008, H.W. Bush in 1992 and Carter in 1980. All three arguably had no responsibility for the economic crisis their party was facing and yet they took the brunt of the blame. The worst was Carter, who inherited an inflation time bomb and energy crisis and received 100% of the total blame despite the crisis being tied to the Iranian revolution, an event that would have happened regardless who was president.

Voters will initially blame the Republicans, but when the next election rolls around and we're being overwhelmed by a bad economy, they're going to do what voters do every single time: blame the party in power.

You can reason this or that about what the Democrats should do but Americans love punishing the party in power when things go wrong, even if they're not responsible.

If the Democrats don't push this through reconciliation, they're writing their obituary and likely handing this country back over to Trump in 2024.

[PoliticAverse]

21. Democrats don't want to do it through reconciliation, but if Republicans hold fast...

and Democrats are left with the option to let the US default or pass the debt limit through reconciliation, do you think Democrats will choose default?

[Celerity]

22. they need to do something, that is for sure

hopefully they use this to modify the filibuster, and then use those mods to pass the voter rights bills

[PoliticAverse]

23. I've given up hope for anything to pass with a modified filibuster but it could happen...

on a bill by bill basis.

[Celerity]

25. I have seen many constitutional attorneys and experts say that because these bills are on the

Legislative Calendar for the Senate (as opposed to the 2 previous mini-nuke carve-outs which were on the Executive Calendar) that if you modify for one bill on the Legislative Calendar it can be used for any other bill on the Legislative Calendar. That is why Manchin and Sinema are so hesitant to modify in any sort of meaningful way.

[peppertree]

2. Hence the Repug desire to bring it about

They want an Argentina-style crisis, so they can then point at Biden and say: "Look how awful things are - and he's the president!!"

[Rstrstx]

4. Didn't they try this with Obama?

If I remember right it didn’t work out so well for them

[Phoenix61]

8. I was thinking the same thing. nt

[jimfields33]

17. It didn't?

They got all three branches at least for two years.

[A HERETIC I AM]

5. A larger crash than just the US economy would result

US Treasuries are held by banks worldwide and causing a major selloff in the market for US Bonds would be catastrophic for everyone, not just America

[captain queeg]

10. i know there are plenty of magats and yokels that would be easily decieved

But wouldn't all the financial people who are supposed to be smart and understand how finances work realize the R plan would cause a financial meltdown?

[Boomerproud]

11. Too bad for me I checked into Hotel Reality years ago.

Glad I'm 65 and have good memories.

[LastLiberal in PalmSprings]

27. I'm glad my long term memory is good but short term isn't. I'd hate to recall the last four years.

It's hard living on Earth One while nearly half of the country is on Earth Two (also known as Bizzaro World).

[no_hypocrisy]

18. This insane republican "strategy" doesn't address how much wealth their

"other base" would lose. Stock market, property values, etc. Yes, one can make the argument that the "other base" would go on a bargain-hunting foray of distressed properties and stocks, but they'd be losing as much (if not more) than winning. That's a risky game politically. It's one thing for a default depression. It's another thing to cause one.

[PoliticAverse]

24. They know the Democrats have the power to unilaterally increase the debt limit...

so they don't believe there is any real risk of default. It's all a game of "who gets the blame for the debt".

[Trueblue1968]

26. WHY THE GOP are hated ....