As the United States heads toward its debt-ceiling deadline, political leaders are posturing as they struggle to find a compromise to prevent default. In response, over 200 U.S. economists, including Professor Betsey Stevenson, sent a letter to congressional leaders to warn them of the dangers of defaulting.
"The economic consequences of a federal default are unpredictable, but frightening. A swift and severe economic downturn could follow, with unnecessary layoffs across the economy," they write. "Chaos in world financial markets is highly likely. Higher borrowing costs for the federal government, and indeed for all Americans, could remain with us for a long time—an unwanted legacy of a foolish decision. We should not run the experiment."
Stevenson was joined by a range of impressive economists, including former Federal Reserve chairs, labor secretaries, Nobel laureates, and like her, members of the Council of Economic Advisors.
"We have a wide range of views on economic policies, some 'conservative' some 'liberal,' but we all agree that Congress should raise the debt limit promptly and without conditions in order to eliminate the risk of default," they acknowledge.
She discussed the topic on the Background Briefing podcast, saying, "I certainly hope they pay attention. And it's important that we state something that some people might seem obvious, but simply not paying your debt is not a way to manage your budget!"
Read more about the letter and listen to the podcast:
- Debt Ceiling Letter, Washington Center for Equitable Growth, March 2, 2023
- 200+ Top US Economists to Congress: Raise Debt Ceiling or Face 'Frightening' Crisis, Common Dreams, March 3, 2023
- 200 Economists Urge Congress to Raise the Debt Ceiling to Avoid a "Dangerous and Unnecessary" Crisis, Background Briefing, March 5, 2023