Econ fragile now --- high risk of fiscal crisis
Don Lee, 23 (5/12/2023; Don Lee writes economic stories out of Washington, D.C., Bachelor’s in Philosophy from University of Chicago; “This time, the debt ceiling crisis really could end in disaster”; Los Angeles Times; https://www.latimes.com/politics/story/2023-05-12/the-debt-ceiling-crisis-may-look-like-a-rerun-but-its-not) //LVL
The last time the U.S. government went to the brink of defaulting on its debt — in 2011 — the stock market tumbled and there was something close to a panic across the economy before Washington came to its senses and cut a deal.
Much the same scenario is unfolding now, with potentially even more dire consequences, and there are major differences between then and now that make a bad outcome far more likely.
One difference is that the political climate is more vexed. Not only is there greater polarization and intransigence in Congress, but the paper-thin Republican margin, the personalities of key players, and the outside pressures on both parties make compromise harder to reach.
Adding to the hazard, both the government’s fiscal condition and the American economy as a whole are more fragile than the last time such a crisis developed. In 2011, the country was coming out of a recession. This time it appears to be going into one.