The White House warned state and local governments on Friday (17th) that the risk of US debt default may trigger an economic recession, and interrupt financial assistance for various federal government programs, and urge Congress to raise or freeze the debt ceiling to avoid a crisis.
The White House wrote in a letter to state and local governments on Friday: “Achieving the debt ceiling may lead to economic recession, economic growth will stagnate, unemployment will rise, and the labor market may lose millions of jobs.”
The White House warned that once the debt defaults, the chain effect may extend to all states and cities across the United States. Funds for disaster relief, medical assistance, child health insurance, child nutrition, education, and infrastructure projects may be cut off.
U.S. Treasury Secretary Janet Yellen has repeatedly called for an increase in the debt ceiling, and on Thursday (16th) called Senate Minority Leader Mitch McConnell (Mitch McConnell) for support, but was rejected, seeing debt default The crisis is approaching step by step, and the two parties still disagree on this issue.
Since the restoration of the debt ceiling in August this year, the Ministry of Finance has taken special measures to allow the government to continue to maintain government operations without exceeding the restriction threshold. However, Yellen warned that funds under the special measures will be used up in October, and if Congress still fails to take action, they will face debt default.
The White House warned that if the two parties continue to stalemate over the debt ceiling, the S&P 500 index may plummet and the value of state pension fund assets will decline, which will affect the ability of states to pay pensions.
Brian Deese, director of the White House National Economic Council (NEC), also called on both parties to take action on Friday.
Diss said that the two parties still have not reached a consensus on the debt ceiling issue, and the best way to solve the debt problem is to avoid too many differences of opinion. The most important thing is to avoid harm to the economy and the country.
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