"It will hurt everyday Americans," Rep. Jeffries said on a potential failure to raise the debt ceiling. The US could default as soon as June.
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As Republicans prepare to bring forth a concrete proposal to raise the debt ceiling, Democrats continue to raise the alarm on the catastrophic impact a default on the nation's debt would have on Americans.
Speaker of the House Kevin McCarthy reportedly held a private meeting on Tuesday to outline a deal he would support to raise the debt ceiling and keep the US on top of paying its bills. As McCarthy referenced during remarks at the New York Stock Exchange on Monday, the plan would keep spending at 2022 levels for ten years, and it would block many Democratic priorities like student-loan forgiveness, rescind unspent pandemic funds, and introduce stricter work requirements on welfare programs like SNAP.
While McCarthy has been adamant he will not approve a clean debt ceiling increase — meaning an agreement without any spending cuts — President Joe Biden and Democrats have stood firm on the opposite side, calling for a bipartisan debt ceiling raise with no cuts, and a budget deal should be a separate discussion.
House Democratic Leader Hakeem Jeffries emphasized the catastrophic impacts failing to raise the debt ceiling would have on Americans during a CNBC Tuesday interview.
"Even the flirtation with the default is going to hurt everyday Americans," Jeffries said.
"It risks raising car payments, it risks raising home mortgage payments, it risks raising student loan debt payments," he continued. "It will hurt everyday Americans and crash our economy at a very fragile time, particularly in the immediate aftermath of the regional banking crisis."
While the Congressional Budget Office previously estimated the US could run out of money to pay its bills as soon as July, Goldman Sachs warned in a Tuesday note that there is an "increased probability" a default could occur in the first half of June.
House Republicans plan to bring a debt ceiling bill to a vote next week, but some GOP lawmakers have expressed uncertainty it could even gain enough support to pass in the House. Rep. Matt Gaetz told The Washington Post that "I don't know when it's going to have 218 votes."
He added he doesn't know if the bill will have sufficient support "because it doesn't exist in writing yet. We still have to resolve major questions, like the dollar amount and the duration and the policy concessions we seek from the Senate."
Still, the clock is ticking toward what would be a financially devastating — and unprecedented — default. The Joint Economic Committee released a report last month backing Jeffries' claims on the impact a default would have on Americans, saying it could cause a $20,000 loss in retirement savings and higher monthly student-loan and mortgage payments.
It's unclear where the debt ceiling debate will go from here, and both sides are refusing to budge, with McCarthy saying on Monday that Biden will hold the blame for a default due to his refusal to negotiate.
"The longer President Biden waits to be sensible to find an agreement, the more likely it becomes that this administration will bumble into the first default in our nation's history," McCarthy said.
"Let me be clear, defaulting on our debt is not an option," he added. "But neither is a future of higher taxes, higher interest rates, more dependency on China, an economy that doesn't work for working Americans. Let me be clear. A no-strings attached debt limit increase will not pass."
