The highly respected Moody’s Analytics has determined that the Republican debt ceiling plan will meaningfully send the economy into recession.
If you’re keeping track, being pro-recession is a strange position for a party that has campaigned against inflation and recession, though to be fair, Republicans haven’t offered a plan to address either.
of Moody’s analysis found (my attention)
“If the 2023 Limit, Save, Grow Act becomes law, it will slow economic growth over time. When compared
With conditions that include an increase in the net debt limit and no significant changes in fiscal policy
Under current law, real GDP in the fourth quarter of 2024 would be 0.65 percent.
Low point. That is, under a net debt limit scenario, real GDP is expected to grow by 2.25%.
This year compared to 1.6 percent if Speaker McCarthy’s legislation became law.
“While the economy is slowing in both cases, recession risks are uncomfortably high, with the consensus of economists and many investors and business executives expecting a recession late this year or early next.” The timing of government cuts to cap, save, grow legislation is particularly inappropriate because it would meaningfully increase such a decline.
“According to the law, employment declined in the first three quarters of 2024 due to weak GDP growth.In the fourth quarter of 2024, the unemployment rate rose more than 100 percent to 4.6 percent. Compared to the net debt limit scenario, by the end of 2024, employment is 780,000 lower, and the unemployment rate is 0.36 percentage points. higher”
Job loss and recession, what’s not to like about the Republican plan, that is, if you’re a Republican and all you care about is stifling growth and hurting people for political gain.
Moody’s says “x-day” — the day the U.S. government runs out of money — is coming sooner than expected because of the low tax receipts so far. “… X-Day looks like it could come as early as June. If not, and if the Treasury can cough up enough money, the X-date is more likely to be at the end of July.
Meanwhile, Speaker McCarthy is pitching the economy into recession as a grand “bargain” — that is, holding the country and asking what the two parties have refused to do for at least 90 years. About raising the debt ceiling limit in the 20th century. For example, it was raised 18 times by conservative President Ronald Reagan.
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Raising your debt ceiling is like paying off your credit card: you’ve already made the purchase, now it’s time to pay it off. But instead, Republicans like to use debt settlement as an opportunity to arm their debtors. In essence, their argument was ‘we don’t pay what we agreed to pay. You change whatever you choose to do and then we pay a portion of our bill, but only for the next year.
Again, the debt ceiling was raised 18 times under Reagan. What they “identify” as “fiscal conservatives” is not a problem. Raising the debt ceiling only became an issue when the first black president was elected and Republicans were trying to become the party of awareness.
It might be fair to say that Republicans care about the deficit and that’s a good thing, except it isn’t A new study has confirmed that Trump and Bush will cut taxes They are “mainly” responsible for the rising debt ratio. Without the Bush and Trump tax cuts, “debt will steadily decline as a percentage of the economy.”
All of this was said before Republicans passed Trump’s tax cuts, which created huge deficits that mostly benefited the wealthy. They did it anyway. Now they want to take food away from the poor and children to make up for those tax cuts, but not even in the usual budget negotiations.
It is worth noting that The Republican proposal has $130 billion in unspecified spending cuts. Only for next year. No one but them knows what’s in those unlisted items. So that’s interesting.
Moody’s suggests that under McCarthy’s plan, non-defense spending could fall to its lowest level since the 1960s, “If non-defense spending were fully borne, it would fall to 2% of GDP in fiscal year 2033, the lowest level since the 1960s.” At least in the early 1960s.”
It also cuts SNAP, increases work requirements for childless Medicaid recipients, makes significant changes to President Biden’s energy policy initiatives and prevents Biden’s executive order on student loans.
What do Democrats gain by abandoning President Biden’s accomplishments, climate action, and throwing the vulnerable to the wolves? They will do it again next year, because the Republican “discount” is only good for one year.
Next year is an election year, so the Democratic Party will be in a lot of trouble and will be in a worse situation. But this should be nothing, because the debt ceiling is not a budget process.
Since President Obama has been in office, Republicans have used the debt ceiling as a prisoner of war under a Democratic president as soon as they control the US House of Representatives. They have brought the economy down the cliff and are hanging around laughing and lying on television to explain it.
Economic terrorism is not only a way for Republicans to achieve their policy goals, but their “plan” is also harmful.
It’s hard to come up with a single point that justifies what the Republicans are doing right now. It is spiteful and cruel.
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