The White House on Friday warned that the failure of the US Congress to extend the debt ceiling could plunge the economy into recession and lead to cuts in essential state services.
The government faces a late October deadline on debt limits, after which it may not be able to pay all of its bills without Congressional approval.
President Joe Biden and his aides have been trying to negotiate a deal with Republicans to resolve the confrontation over raising the federal borrowing limit to 28.5 trillion dollars.
The administration warned lawmakers that the country was at risk of another financial crisis and default on its payment obligations.
“Economic growth will weaken, unemployment will rise, and the labor market could lose millions of jobs,” the White House said in a new fact sheet.
For months, Treasury Secretary Janet Yellen has been urging Congress to act, saying that cash flows and “extraordinary measures” used to temporarily fund the US government will dry up by October.
But Republicans, who lost control of the White House in the 2020 election and did not have a majority in the Senate or House of Representatives, balked and put the potential crisis on the shoulders of Democrats.
“It is indescribable, inconceivable that we allow the federal government to default on the obligations it has already made,” White House economic adviser Brian Deese said on Friday.
“We believe it will happen.”