Debt default could trigger recession, Harris and Brainard warn

Washington [US], May 19: Vice President Kamala Harris and top White House economic adviser Lael Brainard said on Thursday that a default on the U.S. debt of $31.4 trillion would throw the American economy into a recession.
In a conference call for Democratic activists, Harris and Brainard urged them to contact lawmakers to express opposition to a debt default that could be less than two weeks away.
Harris used the call to keep the focus on the looming default as President Joe Biden spends the next few days in Japan attending a Group of Seven summit of world leaders.
"A debt default could trigger a recession," she said.
Negotiators for the White House and congressional Republicans met again on Capitol Hill to discuss their search for common ground on lifting the $31.4 trillion debt ceiling, and plan to meet again on Friday, a White House official said.
U.S. Senate Majority Leader Chuck Schumer said lawmakers from his chamber should be ready to return to Washington on 24 hours' notice from their recess next week in case they are needed for a vote.
The Democratic senator said he is "pleased that the other side has recognized the best way forward is a bipartisan piece of legislation that can secure enough votes to get through both the House (of Representatives) and the Senate."
Brainard, director of the White House National Economic Council, said Biden's negotiating team has been instructed to not agree to any Republican proposal on lifting the debt ceiling that would take healthcare away from Americans or push any of them into poverty.
Republicans, who are threatening to let the government default, are trying to persuade Democrats to accept tougher work requirements for some federal aid programs, as well as spending cuts, in exchange for lifting the borrowing cap.
Brainard said the administration's goal, in its talks with House Speaker Kevin McCarthy's team, is to work toward a reasonable, bipartisan budget agreement.
"The administration's negotiating team is fighting against extreme attempts to reverse the progress we've made: creating clean energy jobs, combating climate change and lowering costs for middle-class families, including for students and for insulin and other drugs," she said.
The U.S. Treasury Department reiterated Monday it expects to be able to pay the government's bills only through June 1 without a debt limit increase, increasing pressure on Republicans and the White House to reach a deal in coming days.
The limit needs to be lifted regularly because the government spends more than it receives in taxes.
Source: Fijian Broadcasting Cooperation