Biden Warns States, Cities of Fallout From Debt Default
- White House warns of possible recession, slump in federal aid
- Treasury has warned “extraordinary measures” run out in Oct.
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President Joe Biden’s administration is warning state and local governments that the risk of a default on U.S. debt could trigger a recession and curb the flow of federal aid, as it urges Congress to raise or suspend the federal borrowing ceiling and avoid a crisis.
“Hitting the debt ceiling could cause a recession. Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs,” the White House said in a letter to state and local governments, released Friday.