The Republican-controlled House has planted the seeds for a debt-ceiling showdown, with Speaker Kevin McCarthy endorsing a push by his hard-liners to demand spending cuts as part of any extension of the country’s borrowing authority.
The political divide is deep and the stakes are high.
Ultraconservative lawmakers insist they don’t want the country to default, but their conditions for raising the debt limit are unlikely to be accepted by the Democratic-led Senate or President Joe Biden.
Republicans are on a collision course with the White House, which is demanding that Congress raise the debt limit without conditions.
If they fail to resolve their differences and cause a default, the range of consequences includes a stock market crash, a recession, higher interest rates for consumers, a weaker dollar, a U.S. credit downgrade and a government unable to meet all its obligations, from funding the military to providing Social Security benefits.
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