Republican former President Donald Trump on Wednesday played down the severity of a potential U.S. government default, saying the consequences of a failure by Congress to raise the nation’s debt limit “could be maybe nothing.”
Most economists warn that a failure to raise the debt ceiling by June 1, when the U.S. Treasury says the government will start to run out of money to meet its obligations, will trigger a catastrophic economic recession with the loss of millions of jobs.
Democratic President Joe Biden and Republicans who control the House of Representatives are negotiating raising the debt limit, which is a mechanism to allow the government to pay obligations Congress has already incurred, such as payments on foreign debt and monthly Social Security checks.
In a televised CNN town hall appearance, Trump said Congress should claw back money allocated in Biden’s domestic spending legislation. “If they don’t … you’ll have to default,” Trump said. He added consequences of a default could merely lead to “a bad week or a bad day.”
Republicans are insisting on massive spending cuts before they agree to pass a debt ceiling increase. Biden so far is insisting on a “clean” measure without conditions.
Economists say threats by some Republicans not to raise the debt ceiling by June 1 is a dangerous game of Russian roulette with the U.S. and global economy, as a failure to raise it will trigger the first U.S. default in the country’s history.
The debt limit was raised three times without a fight during Trump’s four years as president, a period when the national debt also exploded because of his tax cuts.