WASHINGTON: President Joe Biden’s administration again warned on Sunday of ‘catastrophic’ consequences for the US economy including huge job losses if the country defaults, as negotiations to forge a debt deal are expected to resume this coming week.

For weeks US policymakers, bankers and the White House have warned that the United States is on the precipice of default, a move that could see the country tumble into unknown territory with drastic consequences, including a looming recession and likely global financial contagion.

The nonpartisan Congressional Budget Office forecast on Friday that the country could default on its debts by June 15 if lawmakers fail to agree on a deal with Biden to raise current limits on government spending.

“We shouldn’t be here,” Deputy Treasury Secretary Wally Adeyemo said on CNN Sunday talk show “State of the Union” as he repeated the administration’s call for lawmakers to end the standoff and extend US borrowing authority.

“If Congress failed to raise the debt limit by the time of default, we would go into a recession and it’d be catastrophic,” he said.

“The United States of America has never defaulted on its debt — and we can’t.” Biden has stated he wants a “clean” hike of the debt ceiling, but Republicans are insisting any extension of the country’s borrowing authority, currently capped at $31.4 trillion, come with substantial curbs on spending attached.

Published in Dawn, May 15th, 2023