Bipartisan Policy Center warns of a potential default in June if the debt limit is not raised

The Bipartisan Policy Center, a Washington-based think tank, has issued a warning that the United States could potentially default on its debt in June if Congress does not raise the debt limit. The Center’s report comes as the country continues to recover from the economic impact of the COVID-19 pandemic and faces significant fiscal challenges.
Bipartisan Policy Center highlights the urgency of raising the debt limit
The report from the Bipartisan Policy Center highlights the urgent need for Congress to raise the debt limit, which currently stands at $28.5 trillion. The debt limit is the maximum amount of money the government can borrow to pay for its obligations, including interest on outstanding debt, Social Security, Medicare, and other programs.
According to the report, the federal government is expected to run out of money in June, at which point it will be forced to default on its debt. This would have serious consequences for the U.S. economy and could trigger a global financial crisis.
The consequences of defaulting on the debt limit
If the United States defaults on its debt, it would have serious consequences for the global economy. The value of the U.S. dollar would plummet, and interest rates would spike, making it more expensive for businesses and individuals to borrow money. This could lead to a recession or even a depression, as companies would be unable to invest and create jobs.
Furthermore, a default would damage the reputation of the United States as a reliable borrower, making it harder for the government to borrow money in the future. This would likely lead to higher interest rates on future debt, which would increase the federal deficit and create a vicious cycle of debt.
Political tensions around raising the debt limit
The Bipartisan Policy Center report also highlights the political tensions surrounding the issue of raising the debt limit. Republicans have traditionally been opposed to raising the debt limit, arguing that it promotes irresponsible spending by the government. Democrats, on the other hand, have been more willing to raise the limit, arguing that it is necessary to meet the country’s financial obligations.
However, with a narrow Democratic majority in Congress, it may be difficult to pass legislation raising the debt limit without Republican support. This could lead to a protracted political battle over the debt limit, with the possibility of a default looming in the background.
In conclusion, the report from the Bipartisan Policy Center serves as a stark warning of the potential consequences of not raising the debt limit. The U.S. government must act quickly to avoid a default that could have severe economic consequences for the country and the world.