Debt ceiling brinksmanship has clear negative effects on taxpayers

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Article written by Wendy Edelberg, Noadia Steinmetz-Silber, via on 23 May 2023

Even if policymakers raise the debt ceiling in time to prevent its constraining payments, the economic effects are unambiguously negative.
The increase in interest rates represents a cost to taxpayers and a lack of confidence among investors.
Moreover, the negative effects could be persistent even after the debt ceiling is eventually increased.
The premium being charged is significantly larger and rose significantly earlier than during the last-minute debt ceiling negotiations in 2011 and 2013.
Should the debt ceiling bind, the negative economic effects would quickly mount and risk triggering a deep recession.

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