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2023 United States debt-ceiling crisis: Difference between revisions
2023 United States debt-ceiling crisis (view source)
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The federal debt ceiling was raised in December of 2021 by $2.5 trillion to $31.381 trillion, which lasted until January 19, 2023.<ref>https://www.crfb.org/papers/qa-everything-you-should-know-about-debt-ceiling</ref> | The federal debt ceiling was raised in December of 2021 by $2.5 trillion to $31.381 trillion, which lasted until January 19, 2023.<ref>https://www.crfb.org/papers/qa-everything-you-should-know-about-debt-ceiling</ref> | ||
== Republicans Bill == | |||
The bill would suspend the debt ceiling through either March 31, 2024 or a $1.5 trillion increase from the current $31.4 trillion ceiling - whichever comes first. CBO finds the bill would save $4.8 trillion through FY 2033, with about $4.2 trillion of policy savings and $543 billion of interest savings. As a result, debt as a share of GDP would rise less than half as fast as currently projected – from 98 percent of GDP to 106 percent by FY 2033, compared to 118 percent of GDP projected under current law.<ref>https://www.crfb.org/blogs/cbo-scores-limit-save-grow-act</ref> | The bill would suspend the debt ceiling through either March 31, 2024 or a $1.5 trillion increase from the current $31.4 trillion ceiling - whichever comes first. CBO finds the bill would save $4.8 trillion through FY 2033, with about $4.2 trillion of policy savings and $543 billion of interest savings. As a result, debt as a share of GDP would rise less than half as fast as currently projected – from 98 percent of GDP to 106 percent by FY 2033, compared to 118 percent of GDP projected under current law.<ref>https://www.crfb.org/blogs/cbo-scores-limit-save-grow-act</ref> | ||
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== Default Consequences == | |||
Based on simulations of the Moody’s Analytics model of the U.S. and global economies, the economic downturn ensuing from a political impasse lasting even a few weeks would be comparable to that suffered during the global financial crisis<ref>https://www.moodysanalytics.com/-/media/article/2023/debt-limit-brinkmanship.pdf</ref> | |||
* Real GDP would decline almost 4% peak to trough | |||
* Nearly 6 million jobs would be lost, and the unemployment rate would surge to over 7% | |||
* Stock prices would be cut almost in one-third at the worst of the selloff, wiping out $12 trillion in household wealth. | |||
* Treasury yields, mortgage rates, and other consumer and corporate borrowing rates would spike, at least until the debt limit is resolved and Treasury payments resume. Even then, rates would not fall back to where they were previously | |||
== 2011 Debt Ceiling Episode == | |||
== References == | |||