The White House has said a default by the U.S. government on public debt could cause serious damage to the U.S. economy.
The White House added in a statement that there is a broad consensus among economists that exceeding the debt ceiling will generate an economic catastrophe that can now be avoided.
The U.S. public debt exceeds $31 trillion, equivalent to 125 percent of the country's GDP.
US President Joe Biden's economic advisers said that if the world's largest economy defaults on time and prolongs, the US labor market could lose more than 8 million jobs this summer, AFP reported.
The advisers added that if this catastrophic scenario materializes, GDP will shrink by 6%, while financial markets will lose 45% in the third quarter of the year.
If the United States experiences a short default, advisers on the White House Council of Economic Advisers expect the U.S. economy to suffer from higher unemployment and a lower recession.
This is a major risk for the United States, as the country has never found itself in default.
Republicans refuse to agree to raise the federal public debt ceiling, which is usually routine, unless Democrats first approve deep spending cuts.
Exceptional measures
The administration warns that failure to raise the public debt ceiling will result in the United States defaulting on its $31.4 trillion debt, a historic first that would shock the United States and the world alike.
President Joe Biden's administration has taken measures to cut spending and avoid default, but the deadline for those measures expires next month.
U.S. Treasury Secretary Janet Yellen has warned that the federal government could run out of cash by that date if Congress fails to agree on suspending the debt ceiling.
What is the debt ceiling?
The debt ceiling is a restriction imposed by Congress (House and Senate) on the amount of money the federal government can borrow to pay its bills.
According to U.S. Treasury data, the debt ceiling has been raised nearly 1960 times since 80.
Raising the debt ceiling allows the federal government to continue issuing Treasury bonds that generate revenue and help it pay its bills, and investors around the world buy bonds because they are seen as a safe and reliable investment.