Default Dangers amid Slowing Economy

Latest Economic Growth Figures Highlight Cost of Debt Limit Standoff

By Michael Ettlinger and Michael Linden | July 29, 2011

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Earlier this summer the Center for American Progress demonstrated that a two-month failure to raise the federal debt limit could result in the largest quarterly economic decline since 1947. We then explained why fears of default were a drag on the economy over the past several months.

Now come the latest economic growth figures from the Department of Commerce. The new data from the second quarter show the economy barely moved forward, growing by only 1.3 percent. This pace of growth is too slow to generate significant job creation.

As extremist conservatives in the House of Representatives fight to block raising the debt limit unless the Senate and President Barack Obama agree to their demand for a government and society remade to their radical right-wing ideological doctrine, think of these latest economic growth figures and the projections of what will happen if they succeed. Then think about who will be to blame as job losses mount, interest rates rise, investments plummet in value, and the housing market freezes anew.

Michael Ettlinger is Vice President for Economic Policy at the Center for American Progress. Michael Linden is Director of Tax and Budget Policy at the Center.