White House Press Secretary Karine Jean-Pierre suggested on Wednesday that efforts from House Republicans to combine a debt ceiling increase with meaningful spending reforms presently constitute the “single biggest threat” to the U.S. economy.
The assertion came one day after President Joe Biden met with senior Democratic and Republican lawmakers to negotiate an increase in the debt ceiling, a policy established by Congress that prevents the federal government from spending beyond a predetermined national debt limit. Jean-Pierre contended that Biden would “not accept attempts to take the full faith and credit of the United States hostage” in order to enact an “extreme agenda.”
“The single biggest threat to our economy would be if House Republicans fail to prevent default,” Jean-Pierre said in a statement. “That would cost millions of Americans their jobs, increase costs, increase the deficit, and crater retirement accounts.”
Other senior administration officials have made similar assertions in recent days. Treasury Secretary Janet Yellen, who cautioned that the federal government would default unless the debt ceiling is raised by the first day of June, commented in one interview that Republicans are holding a “gun to the head of the American people.”
A debt default would indeed cause a recession should the U.S. federal government, a major borrower of funds that investors across the world generally considered to be stable, fail to repay obligations. The national debt, which exceeded the $31.4 trillion debt limit this year to reach $31.7 trillion, is a source of persistent financial risk and a damper on economic growth.
The commander-in-chief discussed potential mechanisms to increase the debt limit with House Speaker Kevin McCarthy (R-CA), House Minority Leader Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY) at the White House on Tuesday. Biden said in remarks of his own that he found the meeting to be “productive,” while McCarthy commented that he “did not find progress” in the discussions.
Jean-Pierre issued the statement to take credit for the Biden administration’s purported efforts to decrease inflation, which increased 4.9% year-over-year as of last month, according to data from the Bureau of Labor Statistics released on Wednesday. She noted that price levels have decreased substantially “since last summer” even as inflation remains between three times and four times higher than rates seen at the start of the administration.
“Prices at the grocery store have actually come down the last two months, providing some welcome breathing room for families,” she continued. “While we have more work to do to lower costs for families, the President’s Inflation Reduction Act is already working to lower the cost of prescription drugs, health care, and home energy costs.”
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Real average weekly earnings, which consider the impact of inflationary pressures on wages, meanwhile witnessed a 1.1% year-over-year decline, thereby constraining household budgets and decreasing purchasing power, according to more data from the Bureau of Labor Statistics. Jean-Pierre nevertheless claimed that the Biden administration is “creating good jobs you can raise a family on in communities throughout the country.”
Americans are more pessimistic about their finances than at any time since the Great Recession: some 50% of respondents in a February survey from Gallup said they are “financially worse off” compared to one year ago, while 35% believe they are “financially better off.” Low-income Americans were the most likely to say they are worse off since last year.