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Say goodbye to job growth if debt ceiling isn’t lifted

U.S. President Joe Biden speaks with members of his “Investing in America Cabinet” in the Roosevelt Room at the White House in Washington, U.S., May 5, 2023. 

Leah Millis | Reuters

WASHINGTON — President Joe Biden warned that the low unemployment rate in Friday’s jobs report could disappear if House Republicans do not increase the debt ceiling soon.

“Just today they’re reporting 250,000 new jobs,” Biden said at the White House. “The last thing this country needs after all we’ve been through is a manufactured crisis and that’s what this is: A manufactured crisis. That’s what it is from beginning to end, it’s a manufactured crisis driven by MAGA Republicans in the Congress.”

The Bureau of Labor Statistics’ jobs report on Friday found nonfarm payrolls increased 253,000 for the month, far beating Wall Street estimates of 180,000. The growth puts the unemployment rate at 3.4%, compared to an estimate of 3.6%, tying it for the lowest level since 1969.

Biden praised the figures but warned if Republicans did not agree to lift the debt ceiling and prevent a default, the impact on the economy could be catastrophic. The president cited a recent Moody’s report which showed 780,000 people could lose their jobs if the country were to default on its debt.

Lifting the debt ceiling is necessary for the government to cover existing spending commitments already approved by Congress and the president. Doing so does not authorize new spending, but House Republicans have said they will not authorize a lift if future spending cuts are not agreed to. The White House has said it is open to discuss spending cuts but will not negotiate with Republicans on the debt ceiling, and lifting it is their constitutional responsibility.

“They’re two separate issues – two,” Biden said. “Let’s get it straight: They’re trying to hold the debt hostage for us to agree to some draconian cuts, magnificently difficult and damaging cuts. But unfortunately, they’re threatening to undo all this progress by letting us default.”

Congress lifted the debt ceiling three times under the Trump administration without conditions. Biden warned of the impact it could have on the country’s standing in the world, saying America is “not a deadbeat nation” and that the standoff “is becoming an issue in other countries” who worry the U.S. will default.

Biden will meet with the four top congressional party leaders at the White House next week and try to reach a deal. The president last met with House Speaker Kevin McCarthy, R-Calif., in early February. The president said he hopes Republicans will agree to have “normal arguments” instead of ultimatums when they meet.

“Net week I’m going to reiterate to Congressional leaders that they should do what every other Congress has done — that is, pass the debt limit, avoid default,” Biden said. “I’ve said all along: We can debate where to cut, how much to spend, how to finally over the tax system to where everybody has to pay their fair share or continue the route their on, but not under the treat of default.”

This story originally appeared on CNBC

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