March 07, 2023

Warren Urges President Biden to Reject Republican Budget Cuts After New Analysis Shows Millions of Job Losses

New Analysis from Moody’s Finds Republicans’ Proposed Spending Cuts Would Cost 2.6 Million Jobs, Plunge Economy into Recession

Today at 2:30 PM EST, Warren Will Hold Hearing on Economic Consequences of Federal Debt Limit; Moody’s Chief Economist Will Testify About New Data

Text of Letter (PDF) | New Analysis from Moody’s Analytics

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), chair of the Senate Banking, Housing, and Urban Affairs Committee’s Subcommittee on Economic Policy sent a letter to President Joe Biden, urging him to put forward a budget that rejects Republican calls for tax breaks for the wealthy and massive cuts to key government programs. Senator Warren cites a new analysis from Moody’s Analytics finding that if Republicans trigger a default on government debt, the economy will be plunged into a recession and at least 1 million Americans will lose their jobs; and that if Democrats give in to Republican demands for massive cuts, this will also trigger a recession and cost 2.6 million jobs. 

“The Republican approach to the debt ceiling will either result in a catastrophic default and an economic recession – or massive cuts to key government programs that destroy millions of jobs,” wrote Senator Warren. “I know you are committed to making important investments in American families and to making the wealthy pay their fair share, and I urge you to continue that approach in your budget and stand firm against Republicans’ economy- and job-destroying debt ceiling demands. Congress can and should extend the debt ceiling immediately, cleanly, with no ifs, buts, or ands – just as Republicans did three times for President Trump.” 

In the manufactured debt ceiling crisis, Republicans are threatening millions of jobs as leverage to demand massive cuts to critical government programs. These proposals would require slashing all U.S. government spending –  including Social Security, Medicare, defense, and VA spending – by 27 percent - or an even more staggering 78 percent if cuts to those programs are off the table, as some Republicans claim. 

A new analysis from Moody’s found that Republicans’ proposed spending cuts would immediately plunge the economy into recession and cost 2.6 million people their jobs. In the long-term, these cuts would mean the U.S. economy in 2033 would still be short nearly 1 million jobs and 3 percentage points of GDP growth – as if the economy stood completely still for a year, and would result in even more job losses than a short-lived debt ceiling breach, in both the short- and long-term.

Senator Warren notes that serious conversations about reducing the national debt start with making the wealthy and giant corporations pay their fair share in taxes and that Democrats already have many ideas to unrig the tax code and raise revenue – including by reversing Trump’s tax cuts for the wealthy, cracking down on offshore tax shelters, and making billionaires pay taxes on their growing piles of wealth. 

“In your State of the Union address, you pledged that your forthcoming budget will lower the deficit by $2 trillion, and make major investments in the U.S. economy like increasing access to affordable child care – not by cutting Social Security and Medicare, but ‘by making the wealthy and big corporations begin to pay their fair share.’ I urge you to stand firm in that commitment to a strong economy and tax fairness, and look forward to seeing that approach reflected in your budget and in your refusal to give in to Republican blackmail on the debt ceiling,” concluded Senator Warren. 

Senator Warren has led the fight to resist Republicans’ manufactured debt ceiling crisis and called out their willingness to plunge the economy into chaos for political gain. 

  • In February 2023, at a hearing of the Senate Finance Committee, Senator Warren called out Republicans’ for manufacturing a debt ceiling crisis and called on all lawmakers to refuse to cut a single dollar in support for working families. 
  • In January 2023, Senator Warren published an op-ed in the Boston Globe, calling out Republicans in Congress for their plan to hold the country’s debt limit hostage to protect the ultra-wealthy and giant corporations from paying their fair share in taxes, and making it clear that Democrats should refuse any cuts to programs that support millions of working families and small businesses. 
  • In November 2022, in a keynote speech, Senator Warren called on Congress to eliminate the debt ceiling because it only creates leverage for Republicans who are willing to destroy the economy for their own political power.