“We witnessed a decline in household and business confidence, a fall in household wealth as equity prices fell amid a spike in market volatility and wider credit and mortgage spreads,” Frost said. “Each of these shocks contributed to a slowdown in economic activity.”
Senate Republicans want to leverage the next debt limit increase to force cuts in projected federal spending and changes to Social Security and other entitlement programs, John Thune, the Senate’s No. 2 Republican told a panel of Bloomberg editors and reporters last week in Washington.
Thune said that should include weighing an increase in Social Security’s full retirement age, currently 67 for people born in 1960 or later. But he didn’t rule out a deal that might simply start the process of making key changes, pointing to a proposal by GOP Senator Mitt Romney, Manchin and Sinema to create special “rescue committees” to recommend ways to keep Social Security and Medicare solvent.
The resulting proposals would get fast-tracked votes in Congress, similar to a failed deficit commission created during the Obama administration.
Scott, who has championed cuts to entitlement programs, said balancing the federal budget should be the goal of debt limit talks.
“The only way that you are ever are going to fix this is you have to dramatically grow our economy,” he said. “As your revenue grows, you can fix things.”
In the House, some conservative Republicans may hinge their support for Republican Leader Kevin McCarthy’s bid to be speaker on assurances that he’ll insist on their demands as part of a debt-limit deal.
The White House and congressional Democrats have sought to portray the Republican maneuvering as dangerous, casting the GOP as trying to hold the economy hostage over policies that would harm the most vulnerable Americans, including the elderly.
“The notion that extreme MAGA Republicans have threatened to default on our nation’s debt for the first time in American history in order to blow up Social Security and Medicare is stunning,” said Hakeem Jeffries, who is poised to become House Democratic leader in January, referring to former President Donald Trump’s “Make America Great Again” slogan.
“It’s my hope that we can find a way out of the brinkmanship,” he added.
White House Press Secretary Karine Jean-Pierre pointed out that Republicans in Congress supported raising the borrowing limit three times under Trump, who presided over a $7.8 trillion increase in the national debt.
“The sooner they act, the better for our economy and our country,” she said.
—With assistance from Alexandra Harris.
This article was provided by Bloomberg News.