Former Labor Secretary Robert Reich believes the terms between Kevin McCarthy and other hardline members in the run-up to this confirmation as House Speaker, as reported by certain media outlets, could be the “most economically irresponsible backroom deal in Republican history.”
Reich was referring to the “debt-prioritization” that was reported as part of the secret agreement that McCarthy made with his detractors to support him for Speaker.
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“They agreed that when Republicans hold firm on not raising the debt ceiling, they’ll pass a bill instructing the Treasury to prioritize: 1) first, debt service payments, 2) next, Social Security, Medicare and veterans benefits, and 3) third, military funding,” Reich wrote in a blog post, citing a Washington Post report.
“Everything else would be sacrificed — including critical federal expenditures such as Medicaid, food safety inspections, border control and air traffic control. The U.S. would be forced to halt payment for as much as 20 percent of [the] money it already promised to spend,” he said.
Even conservative economists are warning that the consequences could include a stock-market spiral and significant job losses, Reich pointed out. “It’s also the most politically foolish. It would, in effect, put the interest of bondholders — including Chinese lenders to the United States — over the wellbeing of Americans,” he added.
White House Statement: The White House has reportedly made a statement asking McCarthy and other Republican members to “come out clean.”
According to a report by Politico, White House spokesman Andrew Bates said that an unprecedented tax hike on the middle class and a national abortion ban are just glimpses of the secret, backroom deals McCarthy made with extreme MAGA members to claim the gavel.
Reich’s comments come in the backdrop of Treasury Secretary Janet Yellen saying the U.S. will hit its debt ceiling on Jan. 19, months ahead of predictions. “Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the [U.S.] from defaulting on its obligations,” Yellen had said in a letter.
Image and article originally from www.benzinga.com. Read the original article here.