McCarthy's Plan Would Spike Unemployment, Slow Economic Growth, If Enacted, Moody's Analytics Reportedly Predicts

House Speaker Kevin McCarthy's deficit reduction plan would notably slow economic growth and increase unemployment next year, if enacted, an analysis by Moody's Analytics reportedly said.

What Happened: The research unit headed by Mark Zandi estimated that gross domestic product would increase 1.6% in 2024 on a fourth-quarter over fourth-quarter basis while unemployment would close the year at 4.6% if the proposal became law, reported Bloomberg.

The figures compare with a forecast of 2.25% growth and a 4.2% jobless rate if the debt ceiling was raised without conditions, as President Joe Biden has been demanding, it said.

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"By year-end 2024, employment is 780,000 jobs lower," Zandi and economist Bernard Yaros wrote in a report.

Moody's also pointed out that the program would slow the expansion of the federal government's debt. Publicly traded debt as a percentage of GDP would be 106.5% at the end of 2033, compared to 116.5% otherwise, it said according to the report.

Crucial Vote: McCarthy had said on Sunday the House would vote on his spending and debt bill this week and also invited President Joe Biden to discuss the debt ceiling.

"Taxpayers are on the hook for $10.5 TRILLION in interest on the debt. That’s just the interest payments—not even the debt itself. That’s more than we’ve had to pay in the last 80 years. We owe it to the American people to negotiate a responsible debt limit increase," McCarthy said in his tweet.

Meanwhile, the Treasury Department, will soon release an updated estimate of the so-called "X date" when extraordinary measures are exhausted and the U.S. can no longer meet its obligations, said a Bloomberg report.

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