What They Are Reading in the States: Speaker McCarthy and Congressional Republicans Hold Economy Hostage, Threatening Catastrophic Default or Catastrophic Cuts

Across the country, news outlets are reporting on the catastrophic impacts a default on the national debt would have on local communities and economies. A default on the debt would be an unprecedented event in American history and threaten deep economic recession – including the loss of Americans' jobs and savings – just as President Biden leads a historic recovery from the challenges brought on by the COVID-19 pandemic.

As the Sacramento Bee reports, a default could lead to massive unemployment and critical cuts to social security and retirement benefits.

House Speaker Kevin McCarthy and Congressional Republicans are holding the U.S. economy hostage, threatening default unless their devastating cuts are passed into law. Speaker McCarthy's bill – the Default on America bill – cuts 60,000 teachers, hurting 25 million kids; cuts 30 million veterans health visits and increases the disability claims backlog by 130,000; eliminates 2,000 border agents which would allow 900 pounds of fentanyl into the country; and threatens health care for nearly 21 million Americans. All to pay for their tax cuts for billionaires and profitable corporations.

President Biden's budget will grow the economy and cut the deficit by nearly $3 trillion over 10 years, including by cutting wasteful spending on big pharma and big oil.

Read below for a sampling of coverage in the States:

Boston Globe: A debt limit breach could be like a government shutdown – but much worse

Unlike with a government shutdown, the damage from a first-ever debt limit breach — which could happen as soon as June 1 — could be more severe and long lasting, experts said. Just getting dangerously close to one in 2011 led Standard & Poor's to downgrade the US government's top-level AAA credit rating for the first time, causing higher government borrowing costs. Coming close again, or even failing outright to pay some government bills, could lead to downgrades from the other two credit ratings companies, Fitch Ratings and Moody's Investor Services, that could sharply raise US government borrowing costs for years. "A shutdown is an economic problem, but it's not an existential problem," said Mark Zandi, chief economist at Moody's Analytics, an economics research and consulting firm that is separate from the credit rating company. "A debt limit breach is existential."

Detroit News: What a default on the national debt could mean for Michigan

A short-term default could lead to a small recession costing around 1 million jobs and up to a 5% unemployment rate, estimated Moody's Analytics in a March report. A longer default would create a much worse recession, which Moody's estimated at around 7 million lost jobs and a more than 8% unemployment rate. Unemployment would mean families would be making less money and contributing less in tax revenue to the state and local governments — less for schools, police and firefighters, road repairs and more… there is a likelihood that Social Security payments, SNAP benefits (food stamps), and funding for services like Medicare and Medicaid could be disrupted. It could also interrupt payments to people who are on federal payrolls and people who are in the military.

Sun Sentinel: Debt ceiling war raises angst among Floridians

"Failing to increase the debt limit would have catastrophic economic consequences," according to a policy statement on the Treasury Department website. "It would cause the government to default on its legal obligations — an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans — putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession." The department also notes that the debt limit "does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past." Yet, the showdown between the Biden Administration and Republicans in Congress is about future spending and the spiraling federal deficit. Republicans want the White House to accede to spending cuts as a price for authorizing another increase in the debt ceiling.

Sacramento Bee: What does the debt ceiling fight do to California's economy? What experts say

The U.S. has never defaulted on its debt, so it's not clear exactly what would happen if it did. Chances are that financial markets and lenders would begin to get nervous as the June 1 deadline approaches, triggering all sorts of problems… "California could be impacted with closures of some federal offices and perhaps closures or reduced hours or services at national Parks like Death Valley and Yosemite. Because there is a lot of aerospace manufacturing in the state, some payments to government contractors might be delayed. Some program awards may be delayed, postponed, or even canceled."